This recent comment on Reddit is interesting because of the credibility of Ronnie Moas, a top rated analyst by TipRanks (Ranked #161 out of 4,594 Analysts on TipRanks (#206 out of 10,677 overall experts). I share his concern about this being a short term bubble (which his article will help accelerate), but there is no doubt that the Blockchain technology used by cryptocurrencies will become a major catalyst for many applications (e.g. IoT, financial transactions, etc).
Ronnie Moas from standpointresearch.com here. Top Ten Ranking 2008-2017. Daily Notes & 50-75 stock picks per year. Make sure you are securing your cryptocurrencies as they are not protected. Trezor.io is one way to do so. Do not take a bet you can't afford to lose. I recently set up an account for myself at coinbase.com and bought a little bit of Litecoin, Bitcoin and Ethereum (disclosure). This post should not be viewed as investment advice or as a recommendation It is for information purposes only. I do have a (more thorough) 40-page report going out to clients/subscribers later this month. That being said --
I am only a bit concerned that there may be a near-term bubble here as some of these cryptocurrencies are up 500%-1000% (or more) recently. Bitcoin quadrupled to $2500/coin since October, but in my opinion, it is worth $25,000-$50,000/coin. There are only 21,000,000 in circulation and the world will fight over those 21 mln coins. It is capped. There will never be any more Bitcoins produced. 21,000,000 X $25,000 = $475 billion. The Gold in circulation is worth $8 trillion. If 5.0% of the Gold goes into Bitcoin you get to $25,000/coin. In stocks and cash there is $80 trillion. If 0.5% of the money in stocks and cash goes into Bitcoin you get to $25,000/coin. The Bonds market is even larger than the stocks and cash market. Gold does not move much and neither do bonds. The stock market is over-valued and cash lost 75% of its value since 1967. Do you have any doubt that 1% of the money in cash, bonds, stocks and gold will end up in cryptocurrencies (that can’t be manipulated by central banks and governments)? Today Gold, Cash, Stocks and Bonds are $200 trillion -- that is $25,000 for every man, woman and child in the world. Cryptocurrencies are $80 billion. Do you know what $80 billion divided by $200 trillion is? It is 1/25 of 1%! So, crypto-currencies would have to jump 25X just to get to 1% of the $200 trillion market. What happens if it goes to 2% or 3% as many expect? If it goes to 4% then you just turned $10,000 into $1,000,000 on a 100X return.
Bitcoin market cap is now >$40 bln and Ethereum is approaching $30 bln. Looks as though there is legitimacy here. They have run up a lot already, but crypto-currencies are still just 1% of Gold ($8 trillion) and less than 1/10 of 1% compared to stocks and cash ($80 trillion).
If this is legitimate and crypto-currencies capture 1.0%-1.5% of the market share, then you are looking at a situation where a $100,000 investment today could be worth more than $1,000,000 a few years (or more) down the line.
This will either crash and burn … or continue to go higher and take market share away from stocks, other precious metals, bonds and currencies. I will be putting out a 40-page report on this in July.
I am just now starting to familiarize myself with cryptocurrencies. At first glance my thought is that I think it would not hurt for people to take a shot on this and hold for a few years. If they lose a few bucks, at least they took a shot. In life, you miss every shot that you do not take.
It will probably be more upsetting to watch it go up another 1,000% (from the sidelines).
Ethereum is apparently the rising star with a better technology than Bitcoin. If this ever becomes part of asset allocation models it could really skyrocket. At first glance, I don’t know what to make of this. I graduated High School in 1984 (at age 17). The $US has lost half of its value since then and it has lost more than 75% of its value since some of you older folks were in high school. Kids that graduated High School a few years ago who bought Bitcoin and Ethereum are now retired multi-millionaires. There are hundreds of videos on YouTube about crypto-currencies. You will see everyone from Managing Director of the IMF (Christine Lagarde) and John McAfee ... to Bill Gates and Richard Branson weighing in on this.
One highly regarded person who jumped on this very early was Max Keiser. I was on his (very) popular (worldwide) show (The Keiser Report) three times back in 2014. I wish I had taken Max more seriously. He was quite emphatic about this and he is quite a sharp individual.
I have concerns about crypto-currency but my bias right now is thinking that this is here to stay and that it is too late for regulators and the (threatened) financial services industry to get this back in the (Pandora) box the same way yellow taxis can’t get Uber back in the box. Just as Uber is now too big to crack down on, so are Bitcoin and Ethereum. I am very excited about this opportunity. In fact, I opened up an account today and already bought some Litecoin, Bitcoin and Ethereum for myself. Just as with any stock recommendation, I can give you ten reasons why you should buy and ten reasons why you should sell or sit on the sidelines. I can afford to lose $25,000-$50,000 on this. What would be more painful is sitting on the sidelines and watching this jump by 500%, 1000% or 2000% over the next 5-10 years. My initial/gut instinct tells me that this is what will happen.
I am looking at what the size of this crypto-currency market (~$80 bln) is relative to the gold market (~$8 trillion) and the stocks/cash market (~$80 trillion). Many people have gold in their portfolios and watching what their gold is doing for them is like watching paint dry on the wall. If you are in stocks that is even more disturbing, because the stock market is at an all-time high and you have to worry about that losing value in the near- to mid-term.
The cryptocurrency market, if you play it wisely, is actually appreciating at a rapid rate, and even though you may have missed out on the big move in the last few years, it was a big move off of a very low base and this industry is still in its infancy relative to where it could go in the next 5-10 years.
John McAfee is a bit eccentric, but he is also very smart. Check out his 37-minute interview with the Romanian woman. Then start watching other videos on YouTube Re: Block-chain, crypto-currencies, Ethereum, Bitcoin, etcetera.
I do not doubt that in 5-10 years crypto-currencies will be in many portfolios of those seeking higher returns and an asset that does not depreciate the way the $US has (75% in 50 years). The legitimate cryptocurrencies are like Gold. Only 21,000,000 Bitcoins coins will ever be created. I recently opened my account at www.coinbase.com and plan to protect the account with Trezor.io -- I will have a 40-page report available on cryptocurrencies later this month.
Email from yesterday:
It has been a crazy 24 hours for me since I initiated coverage on three cryptocurrencies. Thousands of people visited my website … tens of thousands of people have seen the article (and variations of it) on Bloomberg, CNBC and dozens of other websites that picked up this news. Yesterday I interviewed with CNBC and Bloomberg. Bloomberg also wants me on television next week. This afternoon, the senior editor at one of the most highly regarded and prestigious publications in the world had me on the phone for an hour, and she asked me to give her a copy of my 40-page report on cryptocurrency a week before it goes out to everyone else. They are basically asking for one week of exclusivity (and I agreed). In return, I guess they are going to try to do something that gives me some exposure by combining the cryptocurrency research with an interview and/or good placement in their publication and/or on their website where it will get a lot of attention. The person who I spoke to is actually going to Richard Branson's Private Island for his annual cryptocurrency conference. In theory, I could crash that party, because by British Virgin Islands law, even though Branson owns the island and it is considered ‘private’, it is open to the public. I think it is going to be on Necker Island. I asked the person who interviewed me over the phone if she can take me with her! Sounds like a nice place to do a little bit of networking and raise some money for the charity I volunteer for. She hasn't yet responded to my request though … I do not think she received the request yet that I sent after our call via private Twitter message. This was quite a day – more than 100 people tried to reach me and I ended up taking phone calls from China, Australia, Israel and Portugal. The call from Portugal came from one of the largest newspapers there and they will be writing something based on my piece. I keep checking to see if my (pretty?) face will pop here in the next 24 hours – they asked for a photo -- https://twitter.com/JNegocios (Jornal de Negocios). I have been to Brazil six times, so I know a few words in Portuguese, but we did the interview in English (ha).
I am speaking with the sharpest knives on the block as I prepare my report and no one is countering my argument that cryptocurrency will go from $80 bln to $2 trillion by 2027.
That is 25X return. I think the crypto charts, ten years from now, will look like the Amazon, Facebook, Apple, Netflix and Google charts look today. $5 Trillion would not surprise me. That would be 2.5% of what is currently in stocks, bonds, cash and gold ($200 trillion). |
