Don’t buy bitcoin in 2024. Buy small fast-growing cryptos instead
In August 2023, when Bitcoin was trading for $27,000, I said it was headed to $150,000.
I still 100% believe that.
The bitcoin halving is a big part of my investment thesis (I talk about other factors influencing the price here and here).
So, if I’m bullish on bitcoin and thing it will hit $150,000 in 2024, WHY am I telling you NOT to buy it?
I’m sticking to that call. If anything, I lowballed it.
But I prefer to own smaller, fast-growing cryptos with higher upside.
Let me explain…
Small fast-growing cryptos have a unique trait…
I first heard about bitcoin in 2011 when it was trading under $5.
Didn’t buy any. Big mistake.
But from this mistake, I learned to appreciate a unique trait of crypto. We all had the opportunity to buy BTC from the very beginning, when it was only a pup.
This is the opposite of how the stock market works.
Former cyclist Lance Armstrong was an early investor in Uber (UBER). He invested $100,000 in 2009 when the company was valued at less than $4 million.
He would see gains on his initial stake of around 25,000x — which would turn $100,000 into $2.5 billion.
That’s great for Lance. But he only got that opportunity because he was a rich, connected celebrity. Although an average person could have mathematically turned $1,000 into $25 million investing in Uber, no one did. Because Uber wasn’t available to invest in for regular folks until it IPO’d in 2019.
By that time… it was already a giant company.
Cryptos are different. They basically “IPO” on day one.
Fast-growing cryptos offer asymmetric gains…
In investing, “asymmetric” means the potential upside of an investment is much greater than the potential downside.
Symmetric investing is when an investor risks $500 for a chance to make $500. Or $10,000 for a chance to make $10,000.
Asymmetric investing is risking $500 for the chance to make $10,000.
Bitcoin went live in early 2009. That very same day, investors could buy it for fractions of a cent.
Most cryptos work this way. Their tokens launch alongside their businesses, on day one, when they’re tiny, early stage startups. It’s like investing in Steve Jobs or Bill Gates tinkering in their garages, long before Apple (AAPL) or Microsoft (MSFT) IPO’d.
Crypto lets ordinary investors truly get in on the ground floor.
You notice how many of the people who got rich in crypto were nowhere near Wall Street?
You’ve surely seen the kids driving Lamborghinis… or the 20-year-olds who turned a couple thousand into a couple million in crypto.
Think about how unique that is. Typically, big early stage gains flow straight to Wall Street because it controls the deals and access. The rich get richer.
In crypto, it’s different.
Anyone could buy Ethereum (ETH) when it launched in 2014 for 30 cents. Today, ETH is trading around $3,500. Where else can a regular investor throw $100 into an early stage startup and see it balloon to $11.6 million?
It’s the same for Solana (SOL), which launched in early 2020 at less than $1. It’s up 170x since then. Today, Solana has a market cap of roughly $80 billion.
That’s the same valuation Airbnb (ABNB) had after it went public. Great company, and I love the product. But by the time you could invest in it, it was colossal. Bigger than FedEx (FDX).
Investing in early-stage, fast-growing cryptos is like buying internet stocks in the 90s
Crypto’s come a long way in the last couple years.
There are now 580 million crypto holders worldwide — a number that grew 34% in 2023.
But there’s still a long way to go.
Today, the crypto user experience sucks.
There’s no way a billion people will use crypto in its current form.
And that’s our opportunity…
Remember the internet in the 90s?
I can still hear the screeching sound of my old dial-up struggling to connect to the internet.
Slow websites. Frozen pages. Dropped connections. The early days of the internet were rough.
But if you had the foresight to invest in new types of companies like Amazon, Google, and Cisco Systems when the web was in its infancy you made life-changing money.
The lesson: It paid to make smart bets on the internet when it was still messy.
I bring this up because crypto is a lot like the early days of the internet.
Not user friendly. Messy. Takes effort to navigate.
The frustrating user experience means we’re still very early to crypto.
But just like the internet, crypto will become much easier to use. This is going to attract hundreds of millions of new users, fueling years of rapid growth for crypto businesses.
By investing now, you can set yourself up to profit from this growth.
Bitcoin is past its asymmetric growth phase…
It trades for about $62,000 as I write. If it hits $150,000 this cycle, as I expect. That’s a little more than a double. Symmetric
Given time, could bitcoin reach $1 million? If its adoption curve continues, absolutely. But it’s highly unlikely to shoot up 10X.
Don’t buy it…
Instead of bitcoin, buy small, early-stage, fast-growing cryptos.
With Bitcoin halving begins the best part of the crypto bull market — the Euphoria phase where cryptocurrencies across the board start surging.
But you want to buy the right cryptos.
I wouldn’t touch 99% of them… But the other 1% will change the world.
The crypto market is still so small and so new, there’s plenty of room for exponential growth.
And you can get in on the ground floor. Something which used to be reserved only for the ultra rich.
That’s what I’m doing with my money.
Investing in early-stage fast-growing cryptos. It’s the most asymmetric opportunity today.
Of course, booking 1,000%+ asymmetric gains is easier said than done, and it requires taking greater risk.
That’s why I recommend putting only 1%–2% into crypto, max.
P.S: If you enjoyed this, subscribe to my investing letter The Jolt⚡ and learn about disruptive megatrends like AI, robotics, crypto, etc.
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— Stephen McBride, Chief Analyst at RiskHedge
