Nick’s Note: Cryptocurrencies are on a meteoric rise. And most investors fear they may now be in bubble territory. But there are smart ways to play—and profit—from bubbles.
Palm Beach Confidential editor Teeka Tiwari has delivered life-changing gains to his subscribers from the crypto boom. No one can match his record. Today, Teeka shows you how he’ll continue to rip profits from the market all the way up…
By Teeka Tiwari, editor, Palm Beach Confidential
Just recently, a newsletter guy wrote that the cryptocurrency space felt like 1998–1999.
(He was referencing the latter stages of the dot-com bubble.)
I’ll explain why I hope he’s right about that in a moment.
This, of course, is just another way of expressing the same fear I’ve heard for two years: “Is it too late to get into bitcoin?”
When he wrote his article in October, bitcoin was at $4,400. Since then, it’s reached new highs over $6,160.
Friends, over the next three years, bitcoin will trade for more than $25,000.
And if that newsletter fella is correct—and this really is like 1998–99—bitcoin will shoot to over $60,000.
In this essay, I want to show you why you must own some bitcoin now.
I’ll also show you how you can protect yourself from the day when (like all assets) bitcoin corrects in price.
There are many reasons why bitcoin will continue to rise.
Today, I am going to focus on one single metric. An analyst I respect says this metric has been responsible for 94% of bitcoin’s growth.
The Network Effect
Tom Lee is a polarizing figure…
From 2007–14, he was chief equity strategist at JPMorgan. He’s been top-ranked by Institutional Investor every year since 1998.
Today, he heads research at Fundstrat, one of Wall Street’s top research firms.
When everybody was bearish on stocks in 2015, Lee was pounding the table to buy. When the world went all-in bullish in 2017, Lee counseled caution.
Lee is a guy who’s unafraid of going against the crowd. That’s why I wasn’t surprised when he started getting bullish on bitcoin.
His argument is based on Metcalfe’s Law.
You see, Lee views bitcoin as a social network. And Metcalfe’s Law says the value of a network is the square of the number of its users.
We don’t need to get into all the math involved in Metcalfe’s Law. In short, it’s an equation that shows as more people join a network, the more valuable the network becomes.
Metcalfe’s Law is why Google, Facebook, and Alibaba are worth $689 billion, $500 billion, and $450 billion, respectively.
In a recent interview, Lee explained that over the last four years, 94% of bitcoin’s price move is explained by this equation.
Networks tend to be self-fulfilling prophecies. That means as more people use them, they attract even more users.
Think about Facebook.
Ten years ago, my 75-year-old father-in-law would have called it a stupid waste of time. Today, he’s all over Facebook because all of his friends are on Facebook.
This same “network effect” is now working in bitcoin’s favor.
Bitcoin usage is growing at 122% per year. It’s one of the reasons why Lee thinks bitcoin will hit $25,000 in three years.
But it could go even higher than that…
How to Profit (and Protect Yourself) in a Bubble
People who don’t understand the network effect will continue to question bitcoin’s valuation… just like they’ve done with Facebook, Alibaba, and Google.
But if you had the courage to defy the naysayers and just pick up a small position of $500 in each when they went public, you’d be sitting on $15,173 today.
And that brings us to how to handle the eventual day when bitcoin’s rise comes to an end.
At Palm Beach Confidential, we use a technique called “asymmetric risk” investing.
This is when you invest a small amount of money into an idea that can have a massive move higher.
The beauty of this approach is if the idea goes to zero, your loss is very small. But if the idea skyrockets, your payoff is huge.
As the market moves up, you want to harvest profits. This is exactly what we did recently in one of our crypto plays.
Subscribers who invested $400 in this particular recommendation have taken profits three times.
They’ve pulled out their original investment—plus an additional $2,300 in realized profits. That’s money in the pocket… and they still hold 40% of the original position.
So even if this idea went to zero tomorrow, they’re still up 475% on their initial investment.
One of my subscribers, Jon M., is an example of this strategy in action. He used this same approach to turn $250 into $125,000.
Recently, we used this approach on another idea. We’ve been able to harvest gains of 582%, 1,522%, and 1,016% all from the same idea.
This is how we manage “bubbles” at Palm Beach Confidential. We profit from them.
We’re not just going to ride it up and then ride it down. We’re going to continue ripping profits out of the market all the way up.
And when the bubble does burst… we’ll be safely nestled on top of the big pile of realized profits that we’ve taken along the way.
That’s why I sure hope that newsletter guy is right about this being like the 1997–98 dot-com bubble.
From 1997 to 2000, Amazon went up 800%… Oracle went up 523%… and Cisco went up 447%. The entire Nasdaq grew by 99%.
If bitcoin grows at a similar rate, we’ll easily see $60,000 per coin. And you can bet we’ll be harvesting gains all the way up.
Let the Game Come to You!
Editor, Palm Beach Confidential
P.S. Cryptos are catching some exciting attention in the world news, but there are a few distinct things you should do to protect yourself as you invest in them.
On Thursday at 8 p.m. EST (rebroadcast 8 p.m. PST), I’ll be going over my entire system for investing in cryptocurrencies during a special webinar.
This is the same strategy I used on October 5 to make 200%-plus gains in less than two weeks on a cryptocurrency called Stellar Lumens.
Plus, I’ll be giving away $1 million in bitcoin during the event. You can learn how to claim your portion by attending. Click here to automatically register.
Meanwhile, check tomorrow’s Daily. I’ll show you another major catalyst that will send bitcoin higher. Stay tuned…
Cryptos are all the rage right now. No one in the industry knows more about this space than Teeka Tiwari. Send your crypto questions to him right here.