The Crypto “Great Awakening” Accelerates
The power of a Big Dominant Trend … the shift from cash to crypto for businesses … maintaining the right focus as an investor
As I write, bitcoin is down roughly 10% from its recent high …
Yet, it’s up 5% over the last month …
But it crashed more than 20% in the second half of February …
However, it’s up 140% over the last three months …
But, but, but …
It’s all noise.
These shorter-term price movements are a distraction from the far-bigger, far-more-relevant story.
To help set the stage, let’s turn to our CEO, Brian Hunt.
From a recent essay he wrote about investing in general:
… if you want to make big investment returns without working hard or taking much risk, you should learn about an acronym that isn’t on conventional finance websites …
It’s one of the most important acronyms in the world of money and business.
You won’t learn about it in any official study course because it’s something I made up myself.
I call it the BDT.
The Big Dominant Trend.
At any given time, there’s at least one giant “megatrend” shaping world events and human behavior that is so monumental … so impactful … and so powerful …
… that all other trends, controversies, stories, and concerns don’t matter at all when it comes to influencing business trends and stock prices.
The only thing that really matters is the BDT.
The Big Dominant Trend.
You can forget about everything else and focus on it. Nothing else really matters.
Returning to bitcoin, this is what a Big Dominant Trend looks like…
You’re looking at bitcoin’s price exploding nearly 11,000% in recent years.
This underscores an important point …
For long-term investors, bitcoin’s shorter-term price movements are largely irrelevant. The vastly-more-important story is the establishment of bitcoin and the blockchain ecosystem as a Big Dominant Trend — perhaps the biggest dominant trend of modern finance.
Bitcoin and the blockchain-based world of cryptocurrencies are creating an entirely new financial ecosystem. They’re eliminating middlemen … changing how we buy and sell … transforming business sectors, resulting in massive winners and losers.
Today, let’s look at more evidence that this Big Dominant Trend is growing — snowballing, in fact. We’ll look at why there’s tremendous wealth to be made. And we’ll remind ourselves of the right investment focus in all of this.
Yes, bitcoin could fall 50%+ tomorrow. Sure, many smaller altcoins could suffer a 75%+ wipeout. These busts have happened before, and it’s all-but-certain they’ll happen again.
But look back to the Big Dominant Trend above to see where things are going.
***The development of the blockchain/crypto ecosystem is ushering in one of the largest wealth-transfers in history
It’s nothing short of transformative. Fortunately, you’re early enough to be on the right side of it.
Today, we’re going to explore this Big Dominant Trend with the help of our crypto experts, Matt McCall and Charlie Shrem, editors of Crypto Investor Network.
For newer Digest readers, Matt has been a bitcoin bull since 2014 — long before it was popular. Appearing on Fox Business Network in July of that year, he told listeners he’d become a believer in this fledgling investment, even as other panelists dismissed him.
Meanwhile, his partner, Charlie Shrem was one of bitcoin’s earliest backers and today is considered one of the most influential people in cryptocurrencies. He’s been mentioned in Fortune … Forbes … CNN … 60 Minutes … TED Talks … Bloomberg … and The Wall Street Journal … to name a few. His story has been featured in numerous Netflix documentaries and best-selling books. And yes, he’s become a bitcoin millionaire many, many times over thanks to his early involvement.
Here’s what Matt and Charlie wrote about the blockchain/crypto space last fall:
In the future, pretty much everything in the world will be tracked by blockchain.
It’s going to change everything. The way you buy everyday goods and services … buy a home … pay your taxes … maybe even how we vote in the future.
This transformation is already underway, but the truly seismic shift — when the massive profits are made — comes as businesses, consumers, and big-money investors realize what’s going on.
Matt and Charlie refer to this widespread realization as “The Awakening.”
***Today, this awakening is picking up momentum, and we’re seeing this in the growing list of corporations that are turning to crypto to replace cash
From the latest issue of Crypto Investor Network:
Square and MicroStrategy kicked off this corporate crypto movement last year when they purchased bitcoin to diversify their treasuries away from cash. This is a major shift. Corporations are starting to diversify away from cash, viewing it as a potential risk that needs to be mitigated.
In many ways, companies find themselves at a crossroads. Cash earns little to no interest right now, and with the possibility of higher inflation, that cash could decrease in value.
Bitcoin and altcoins are increasingly sought-after alternatives. They offer a potentially more secure and better way to lessen the risk of holding cash.
As evidence, Matt and Charlie point toward two recent examples.
The first is Meitu, a Hong-Kong-based video processing software company. It just purchased $17.9 million of bitcoin and $22 million in Ethereum.
From Matt and Charlie:
This was incredibly significant. It marks the first time a company has disclosed a major purchase of Ethereum for its treasury. We are now seeing cryptocurrencies other than bitcoin being added.
Meitu’s statement was also significant, as it shows awareness of cryptos not just as an alternative to cash but breakthroughs in and of themselves.
The company said that buying crypto helps diversify its holdings away from cash, but “more importantly, the board considers this a demonstration to investors and stakeholders that the group has the vision and determination to embrace technological evolution, and hence preparing its foray into the blockchain industry.”
Sounds like an awakening to us.
The second company trading out cash for crypto is Aker ASA, a Norwegian holding company that is majority owned by billionaire Kjell Inge Rokke.
It appears Aker is also launching a new company called Seetee, which will focus on investing in bitcoin-related projects and will hold all liquid assets in bitcoin.
Matt and Charlie explain that both examples demonstrate that companies are not just making investment decisions for corporate treasuries — they’re increasingly recognizing the value of blockchain and cryptocurrencies as investments and for the world.
***The tip of the iceberg for cryptos on corporate balance sheets
According to S&P Global, U.S. corporations held a record $2.5 trillion in cash as of the end of last year. That’s a tremendous amount. Plus, it doesn’t include the cash held by international companies.
Matt and Charlie expect more and more businesses will add bitcoin and other top tier cryptocurrencies as alternatives to cash.
We just saw this with Tesla purchasing $1.5 billion of bitcoin. By the way, that $1.5 billion nearly doubled in value when bitcoin topped $60,000 last weekend. If you’re a chief financial officer, would you rather have that outcome, or the 0% return you’d get holding cash?
From the Crypto Investor Network update:
So far, Tesla is the only company among the 10 largest market caps that has made this move. But we think this trend is just beginning, so just imagine if — or more likely when — Apple, Microsoft, Alphabet, Facebook, and other Fortune 500 companies jump on board.
That amount of money involved is staggering, and it would have a huge impact not only on bitcoin but altcoins and the entire crypto space as well.
That’s why now is such a great time to invest.
***It’s not just tech companies — it’s the banks and venture capital companies too
Matt and Charlie write that we’re also seeing major banks and investment firms moving into the space by participating in funding rounds of cryptocurrency companies seeking to raise money.
Back to the issue:
NYDIG, a leading technology and financial services firm dedicated to bitcoin, facilitated MassMutual’s $100 million bitcoin buy last year. It recently raised $200 million from a team of well-known investors that includes Stone Ridge Holdings Group, Morgan Stanley, New York Life, MassMutual, Soros Fund Management, and FS Investments. Past investors Bessemer Venture Partners and FinTech Collective also participated.
NYDIG CEO Robert Gutmann said the company “will be working with these firms on bitcoin-related strategic initiatives spanning investment management, insurance, banking, clean energy, and philanthropy.”
As we’ve said, the blockchain revolution is going to touch nearly every area our lives.
The Big Dominant Trend doesn’t stop there.
Matt and Charlie go on to update their readers about crypto/bitcoin ETFs. There are two now, with a third on the way — but a big asterisk goes next to these funds …
Matt and Charlie write that this is putting pressure on the Securities and Exchange Commission (SEC) to approve such a fund in the United States:
There is plenty of interest, but the SEC has so far rejected all applications. In fact, in August 2018, the SEC turned down nine bitcoin ETF proposals … in one day!
For the last eight years, the party line from the SEC has been concerns over volatility, manipulation, and proper oversight, which is ridiculous. The government just doesn’t want to get involved in something it doesn’t understand.
But as with all things crypto, this looks about to change.
This is because President Biden has nominated Gary Gensler to be the next SEC chairman. Gensler is a professor at MIT who has taught a course on blockchain. Matt and Charlie believe he clearly understands the technology and its applications, and will be a friend to the crypto sector.
***Gameplan — prepare for volatility, but stay long crypto
It’s great when we don’t check our crypto account for a few days and then open it to find, say, a 35% pop.
It’s also unpleasant when the reverse happens, and we see everything down, call it, 25%.
But as long-term, wise investors who see the big picture, we need to see this for what it is …
Instead, we need to focus on the blockchain/crypto Big Dominant Trend.
It’s transformative … disruptive … innovative … and most of all, financially-lifechanging.
Here it is again …
Back to Brian on the power of catching a BDT:
When you “nail” the BDT of a given time period, it’s relatively easy to make a lot of money without trying or thinking very hard or taking big risks.
For blockchain and cryptos, the BDT continues to roll on. Fortunately, there’s still tremendous growth ahead of us.
On this note, I’ll let Matt and Charlie take us out:
More and more real-world assets and transactions are moving onto the blockchain. This is the Great Awakening we’ve talked about.
We are heading toward not only a digital world but a tokenized world. Sending money anywhere will take seconds and cost mere pennies. Buying a home will take days, not weeks — and the transaction will cost a small percentage of what it does today. Even tracking a vaccine from the time it was created to the needle going into your arm will be done on the blockchain.
This awakening continues to unfold, creating a once-in-a-lifetime financial windfall for smart investors like you who recognize the opportunity and act today.
We’re thrilled to help guide you on this journey. There is a long way to go and a lot of money to be made.
Have a good evening,
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.