Bitcoin: The End of the Beginning
Bitcoin surged a mind-blowing 1,500% last year, leading many experts to call for “the end of bitcoin.”
But this rally isn’t over yet.
This isn’t the end; it’s only the end of the beginning for cryptocurrency markets.
Everyone has heard of bitcoin. But few people own it. Even fewer understand it.
That’s going to change in 2018.
Author Malcolm Gladwell defines “the tipping point” as “the moment of critical mass, the threshold, the boiling point” in which “ideas and products and messages and behaviors spread like viruses.”
Crypto assets reached this tipping point in 2017.
Bellwether crypto bitcoin surged nearly 1,500%, and total market cap of the crypto space surged from $18 billion at the start of the year to over $600 billion.
But while bitcoin put in a stellar year, that doesn’t mean Main Street investors have missed the boat yet. 2018 makes the perfect time to jump into cryptocurrencies…
The Crypto Game Has Changed
In just nine years, crypto assets have ballooned from a tiny project among libertarian-minded cryptography experts to a global phenomenon.
Corporations and governments are hiring blockchain experts to figure out how to integrate this new technology into their existing businesses.
Expectations for the future of this new asset class range from the Holy Grail that replaces all middlemen on transactions (including banks and governments) to the world’s greatest Ponzi scheme orchestrated by state-sponsored actors in North Korea.
However, I believe investing in bitcoin in 2018 is actually a safer bet than it was two years ago. While the same astronomical returns might not repeat, the risk of total loss has been dramatically reduced.
One of the keys to opening up growth in this sector is simplifying access to new investors. Apps such as Coinbase make buying and selling bitcoin much easier than before.
Coinbase replaced YouTube as the most downloaded app on iTunes. With a few swipes and taps, investors can now swap their dollars for bitcoin, Ethereum, Bitcoin Cash and Litecoin. You can buy bitcoin from the comfort of your couch or while watching your 8-year-old’s soccer game. The market is open 24/7/365.
Globally, there are roughly 30 million bitcoin wallets open. However, many crypto investors own more than a few, so the number of people who actually own bitcoin is likely closer to 10 million.
While there has been rampant growth in wallets in recent months, investors haven’t emptied out their savings and brokerage accounts into the crypto universe. Out of those 30 million wallets, only 3 million contain more than $1,000 in bitcoin, and only 1 million contain more than $10,000 in bitcoin.
Keep in mind the total crypto market cap at $800 billion is just 0.3% of the $215 trillion in total assets globally. There is still ample room for this market to grow as more investors open accounts.
No speculative mania has ever been easier for everyone in the world to participate in than the crypto markets, yet this would qualify as the most underowned, concentrated bubble in history.
Beating Wall Street
Main Street investors have been watching from the sidelines for too many great opportunities while Wall Street and the investing elite have prospered.
Take the case of Facebook.
While shares of Facebook Inc. (Nasdaq: FB) have risen 355% since its 2012 initial public offering (IPO), early-stage investors were sitting on gains of up to 60,000% before reaching public hands.
Uber now commands a $48 billion private market valuation. This is 12,000 times higher than its original valuation of $4 million.
But not one cent of this increase in value has reached the public. Rather, all the gains have accrued to Silicon Valley insiders and large institutions.
This is not the same with crypto, where everyone has an equal shot of finding the next Uber, Amazon or Google.
Wall Street is just now starting to get involved. The Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) launched bitcoin futures in December, which helps the markets function. Goldman Sachs is launching an institutional crypto trading desk.
This all signals that cryptocurrencies are here to stay, and there is still plenty of money waiting on the sidelines for those who jump in now.
2018 and Beyond
In the last few months, bitcoin and the rest of the crypto world went mainstream. The barriers to entry are gone, and savvy investors now see the potential of this new investment class.
And since institutional money is still en route, this market — and the gains — will only increase.
That’s why I say this marks the end of the beginning. The question is no longer whether bitcoin will be essential to a diversified portfolio. It is now a matter of what percentage you want to own, and what other crypto assets are your best bets.
That’s what I plan to help you with in 2018 and beyond.
Editor, Banyan Hill Publishing