Wall Street has a history of using stories called “narratives” to drive its investment decisions…
Often these narratives are grounded in well-researched theories. And they can propel ideas to the forefront of Wall Street’s collective consciousness.
But focusing on the wrong narrative can cause you to lose sight of the big picture…
Over my 30-plus-year career, I’ve witnessed investors cling to narratives that grab their immediate attention… while overlooking ones that eventually spark larger-scale moves.
And that’s happening today with bitcoin…
The short-term narrative is behind its most recent rally to over $12,000. While these stories are good for headlines… they usually don’t last long.
And even when they’re right, they’ll have you focusing on daily price fluctuations instead of long-term trends.
If you’re doing that, then you’re making a huge mistake…
The bigger narrative is playing out in the background. And I believe it’ll send prices wildly higher over the long term.
It’s the story you need to pay attention to…
Short-Term Narrative: Bitcoin As an Inflation Hedge
Over the past few months, there’s been a group of investors who’ve purchased bitcoin as nothing more than an inflation hedge.
Now, this narrative isn’t wrong…
Back in March, I told you the best way to hedge a declining U.S. dollar was to buy bitcoin and gold.
Since then, gold has shot up nearly 20%… and bitcoin has rocketed even higher, at 93%…
You see, central banks around the globe have embarked on a money-printing odyssey to rescue their economies from the effects of the coronavirus pandemic… further diluting the value of their paper money.
Much like gold, bitcoin has a finite supply, so it can’t be devalued. (There can only ever be 21 million bitcoins in existence. Their issuance is strictly regulated by computer code.)
But if you view bitcoin solely as a hedge against inflation… you’ll get caught up in daily price movements.
We saw that happen two weeks ago… when both gold and bitcoin took a hit.
After breaking its record high last month, we saw gold drop nearly 8% after Russian president Vladimir Putin announced his scientists had developed a vaccine for the coronavirus.
Many investors took this as a sign that central banks would slow down their money-printing since a cure might be at hand. So they started to sell their gold and buy stocks again. And of course, there was some selling in bitcoin, too.
It all has to do with bitcoin’s current correlation with gold as a safe-haven asset.
Again, this narrative isn’t wrong. It’s just shortsighted.
While I’m fine holding bitcoin (and gold) as a hedge against inflation… it’s not the main reason I recommend buying bitcoin.
The macro driver for bitcoin is the mass adoption I see ahead. And that’s what will drive bitcoin – and other cryptos – up significantly.
Long-Term Narrative: Bitcoin Adoption
Today, the entire crypto market is only worth about $370 billion. And right now, 35–50 million people own crypto. That’s 0.6% of the world’s population.
But we’ll see hundreds of millions (and possibly billions) of people flood into this space in the coming months and years.
Every major institution that matters has embraced bitcoin and is building the products and services to bring it to their customers.
In its latest earnings report, Square’s Cash App reported $875 million in bitcoin revenue – a 600% increase from the previous year.
PayPal plans to roll out crypto trading to its 325 million users. Robinhood Crypto offers commission-free trades on seven cryptos to its 10 million users. Even Mastercard and Visa recently announced projects and collaborations involving crypto.
More importantly, regulatory changes will make it easier for people to use crypto. Last month, the Office of the Comptroller of the Currency (OCC) issued guidance that banks can now store and work with cryptocurrency. The OCC regulates all U.S. banks. So it’s one of the most powerful federal agencies in the country.
The U.S. banking system alone touches the lives of over 300 million Americans. And it holds north of $20 trillion in assets. If bank customers allocate just 1% of their accounts to bitcoin… bitcoin’s market cap would double.
Friends, digital currencies are the future. This is something I’ve been preparing you for since bitcoin was around $400.
So when you begin to ask yourself a sea of questions about daily volatility… I want you to STOP. I want you to focus on the big picture. And that is: A half-billion people are coming into this asset class over the next few years.
When you go from 35–50 million users up to 500 million users, you can’t help but make a fortune.
Bitcoin can go up 50% one day and drop 50% the next… just on daily headlines that have nothing to do with bitcoin’s long-term driver of mass adoption. So don’t let the day-to-day price movements shake you out of your positions.
The shift from a small market to a large market is the primary narrative you should be paying attention to. It is the narrative that will create the opportunity for real generational wealth. It’s truly a once-in-a-lifetime opportunity.
Once it’s gone, it’s gone forever.
So stay focused on the big picture: mass adoption. And don’t worry about the day-to-day fluctuations.
Let the Game Come to You!
Editor, Palm Beach Daily
P.S. As I mentioned above, we’ll see bitcoin – and crypto – adoption skyrocket over the coming months. And I believe it’ll spark a once-in-a-lifetime opportunity…
But starting with its underlying blockchain technology, I believe we’re about to see the biggest wealth and power shift in U.S. history.
Those who take the right steps now could fantastically grow their wealth… Those who don’t will be left behind.
I put together this new presentation to explain all the details…