Over the last half of 2020, I spent plenty of sleepless nights poring over white papers… reading obscure journals… and reaching out to my network of insiders to get to the bottom of a new trend.
And based on what I’ve uncovered, I believe it could be the biggest boom in crypto since the initial coin offering (ICO) craze of 2017.
The name of the trend is Decentralized Finance, or DeFi for short.
I believe it’ll disrupt our entire financial system the same way the internet disrupted retail.
Over the next decade, DeFi will radically change the way you bank… borrow money and lend money… and receive loan approvals.
And if you position yourself now, I believe you can change the course of your financial life forever… without putting your current lifestyle at risk.
Decentralized Finance is disruptive because it removes the need for many of the “middlemen” that dominate our financial lives. It’s estimated traditional financial middlemen suck out 6% of the value of global GDP annually. That’s $8.5 trillion per year in fees. It’s a massive number.
Fintech firms like Robinhood and Lending Club have tried to dislodge the traditional firms. And so far, they’ve failed. The problem is cost and scale. These fintech firms just can’t scale fast enough to put a decent dent in the traditional players.
Fintech firms are hamstrung by massive ongoing costs that all financial firms must bear. Rather than doing anything different from the traditional guys, they’re following right along in their footsteps.
For instance, while heralded for offering commission-free trades, Robinhood was compensated for selling its customers’ orders to other firms. It all but guaranteed Robinhood customers would get poor execution prices on their trades.
Backdoor compensation deals like this sound like the same old financial system to me. And that’s why these firms have failed to distinguish themselves meaningfully from their more established peers.
But that’s all changing… And it’s thanks to the blockchain and smart contracts.
Smart contracts are computer programs that live on blockchains, allowing them to act autonomously without any human involvement.
This has created a new type of “company” owned by no single central authority.
I know that sounds like a recipe for chaos. In some instances, that’s exactly what’s happened. But in others, we have seen this technology give birth to projects that’ll one day rival Google, Amazon, and Facebook in size, reach, and global influence.
Here’s the great advantage of DeFi: You’ll no longer need to rely on a trusted middleman like credit card companies, banks, mortgage companies, and even traditional savings accounts, for your financial needs.
All that commerce can migrate to DeFi applications.
Here’s the key point to understanding why DeFi will be huge: When you can eliminate the need for a trusted third party… you can dramatically lower costs. When you dramatically lower costs, adoption of the technology is a “done deal.”
Virgin Territory = Massive Opportunity
There’s no playbook for DeFi. We’re in brand-new virgin territory. And I love that because if you want to change your life (but don’t want to risk a lot of money)… you must get into massive trends early.
Helping my readers identify, understand, and invest in these trends is why I write these newsletters. That’s why today I want to explain the lowest-risk, highest-reward way to profit from the DeFi trend.
Before I do that, let me be clear: All crypto investing involves risk, and today’s idea is no exception. However, unlike much smaller plays that have the chance to go up 100-fold or more, this more conservative play has the opportunity to go up “only” 8x.
It has less upside, but it also has far less risk. And so that’s why I call it my “lowest-risk highest-reward” crypto play for the coming DeFi boom.
The name of the project you want to own is called Ethereum.
I’ve picked Ethereum as my lowest-risk, highest-reward DeFi play because it’s the primary blockchain DeFi developers are building on.
Today, hundreds of thousands of software developers are flocking to Ethereum the same way developers flocked to Microsoft’s operating system in the 1980s and ’90s.
In many ways, Ethereum is the Microsoft of this era. Since going public in 1986 with a $583 million market cap, Microsoft has grown into a $1.6 trillion giant. It’s taken 35 years for Microsoft to gain that valuation.
Due to the explosive growth of DeFi, I believe we could see Ethereum hit 50% of Microsoft’s value this year.
Over the long term, I believe Ethereum has the potential to grow into the world’s most valuable software platform.
To my eyes, Ethereum is wildly undervalued. Even at over $1,000 and a $120 billion market cap… I believe Ethereum is a bargain relative to its development trajectory.
As more developers and users move to Ethereum for their DeFi needs… more value will accrue to ether (ETH), Ethereum’s native token.
More Room to Run
With 200,000 developers now working on Ethereum, it has a massive moat. And for much of 2020, the token was wildly undervalued.
That’s why on September 23 last year, I sent a video update to my Palm Beach Confidential subscribers urging them to buy ether while it was “crazy cheap.”
Despite a 256% gain from its March low of $90, I told them of the large-cap crypto projects, Ethereum had the best low-risk, high-reward setup.
In that video, I pounded the table and told everyone to use that opportunity to get into ether or increase their positions if it suited their risk tolerance. Today, the coin trades above $1,000 – up 205% from that recording.
Yet, it’s still undervalued.
Ethereum is disrupting the entire $20.5 trillion financial industry. If it can just capture about 2% of global finance, it would be worth between $400 billion and $800 billion. That makes it about a 4x to 8x gain from current prices.
Long term, I expect Ethereum will have a multitrillion-dollar market cap.
So, I’m raising my ETH buy-up-to price from $550 to $1,400.
Friends, DeFi is going to change the world. And Ethereum will be the platform that serves up that change.
If you already own ETH, consider adding more to your portfolio (if appropriate). If you don’t own it, buy some today… because it still has plenty of runway left.
And don’t worry about volatility. I don’t care if ETH drops 50% tomorrow, and neither should you. Forget about the short-term volatility and focus on the long-term trend.
If you can do that, I believe you’ll look back on your decision to buy ETH as one of your best investment decisions of 2021.
Let the Game Come to You!
Editor, Palm Beach Daily
P.S. While I expect Ethereum and DeFi to really take off in 2021, there’s another crypto trend to keep an eye on… In fact, I believe it could even become the No. 1 investment of the decade.
If you want to set yourself up for explosive crypto gains in 2021 and beyond, check out my presentation right here.