Nick’s Note: Last week, world-renowned cryptocurrency expert and PBRG’s very own Teeka Tiwari told me that “boredom” was the biggest enemy of cryptocurrency investors. We’re so used to massive gains that we forgot about volatility.

Today, Teeka says two events behind the recent pullback are now coming to an end… and that’s why we’re seeing the market rebound. It’s time to get excited again…

Nick: Hi, T. Last week, you told readers to be patient during the crypto pullback. You said it would be only a matter of time until the market turns around. You were right again…

Bitcoin is up 10% since our last interview (see April 17 Daily, “Teeka Tiwari on the Biggest Enemy Facing Your Bitcoin Profits”). And the entire cryptocurrency market is up nearly 20%.

What’s going on?

Teeka: For two months, I’ve been telling my subscribers to prepare for what I call the “Second Boom.”

In the First Boom, we saw a massive surge of buying from individuals. In the Second Boom, we’ll see a massive surge of buying from institutions. That’s what is happening now. Hedge funds, family offices, and even huge money managers are starting to get their toes wet in crypto.

Nick: So what was behind the recent pullback?

Teeka: There were two events that kept the market down. But first, it’s important to say that nothing goes straight up forever. And we had a massive run in the crypto market last year.

So the pullback didn’t surprise me. I have been telling our readers about this for months. People were taking profits, and all that money flowing out of the market pushed down prices.

Look, the cryptocurrency market is still very small. Just before this recent rise, the crypto market size was $250 billion. Apple has almost that much in cash.

In the grand scheme, $250 billion is not that much money. The entire U.S. stock market has a market cap of about $25 trillion. That’s 100 times bigger than the crypto market. And the U.S. bond market is twice the size of the stock market.

When a market is that small, we’re going to see volatility as money comes and goes from it. So we should expect volatility like this.

That’s why I keep telling people to make small $200–$400 investments in each cryptocurrency. That way if we see a 50% correction, you’re only going to lose $100 or $200.

That amount shouldn’t cause you to lose any sleep.

Nick: I can handle that. So what pushed the market down before this recent rally?

Teeka: The first tailwind was tax selling. People who didn’t think about taxes were in for a rude awakening this tax season.

Some even had to sell their cryptos to pay taxes.

Tom Lee of market research firm Fundstrat has done some great work on this. He estimates that U.S. citizens owe about $25 billion in capital gains taxes from their cryptocurrency profits in 2017.

He found that each $1 of outflow from the crypto market has a $20–$25 impact on the overall crypto market. That’s because of herd mentality. When investors see other investors sell, they tend to start selling, too.

Plus, you can read sad stories about people in tough situations. One bitcoin investor I read about (a Reddit user named “Thoway”) bought eight bitcoins in 2017. He sold them near the peak and reinvested in alt coins.

His tax bill is about $50,000. But his crypto holdings are now worth only $30,000 due to the recent pullback. And he only has $5,000 in savings. He’s worried about his future… He’ll probably be forced to sell all his coins.

I doubt he’s the only one in this predicament.

Nick: It’s tough hearing stories like that. I hope the IRS will be reasonable with him. And the second reason?

Teeka: The other thing going on right now is the Mt. Gox liquidation.

For those who don’t know, Mt. Gox was one of the first major bitcoin exchanges. In 2013, it handled over 70% of all worldwide bitcoin transactions.

In February 2014, hackers stole 850,000 bitcoins from the exchange. Mt. Gox declared bankruptcy… and during the bankruptcy proceedings, the trustee locked up the remaining bitcoins.

Now, the trustee for Mt. Gox can sell the bitcoins. And they’re selling in an incredibly stupid way. They’re selling on the open exchanges. From December through February, the trustee sold a half-billion dollars’ worth of bitcoin on the open exchange.

That’s huge selling pressure on the market. And it pushed the market lower.

Even the U.S. government was smarter than this. The Feds seized over 140,000 bitcoins from the online drug market Silk Road in 2013. But the Feds didn’t sell those bitcoins on the open market. They sold them in private sales.

That’s what the trustee should have done—private sales.

That’s how crypto billionaire Tim Draper got a big slug of his bitcoin. He bought it from the U.S. government in a private sale. He even paid a premium for his bitcoin.

But the Mt. Gox trustee has another $1.5 billion in bitcoin to sell to fulfill the bankruptcy order. It’s unclear what he’s going to do with that. Hopefully, he’s learned a lesson.

Nick: Wow… I didn’t realize that was even happening. So is the selling pressure almost over?

Teeka: Given the recent rise in crypto prices, it looks like the sellers have exhausted themselves. In my eyes, it looks like we are in the early stages of a brand-new bull market in crypto.

Nick: I hope so. Thanks again for talking to me, T.

Nick’s Note: We know that the crypto space is still new and confusing to many investors. That’s why Teeka has created our first-ever Cryptocurrency Master Course.

This course will teach you the ABCs of cryptocurrencies and their underlying blockchain technology. It includes video lessons, instructional guides, downloadable resources, and a free electronic copy of Teeka’s new book on cryptocurrencies, New World Money.

Here’s the good news… If you’re already a Palm Beach Letter subscriber, we’re giving you a free year of access to the course. Just click here and log in with your current PBL username and password.

If you’re not a Palm Beach Letter subscriber, you can learn how to sign up for Teeka Tiwari’s Crypto Master Course—and get a free gift from Teeka—right here…

MAILBAG

Teeka’s Crypto Master Course continues to educate the next generation of crypto investors…

From Nicole J.: Hi Teeka. You’ve inspired me to write a book. I will call it “The Smart Woman’s Guide to Blockchain.” I can’t tell you how much this course, your teachings, and being a part of this matters to me, my business, and my future. Thank you.

From Paul H.: I’ve been trying to buy bitcoin for a long time… But I didn’t understand the mechanics of it. Thank you for paving the way.

From Jay H.: I’m a bit familiar with what the Crypto Master Course taught. But going forward, I’m hoping my investment will include suggestions on which cryptos to purchase. There are so many cryptocurrencies out there—and new ones added daily—that to research them all would be too confusing and time consuming.  

From Toney P.: I dove into cryptocurrencies before taking the course and found the course very good for what it covered. There were a few things that were skipped over. For example, many wallets and exchanges now require multi-step authentication.

From Philip B.: One of the best and well-thought-through training video series that I’ve ever taken. Simple and easy visuals. Logic was easy to follow.

From Travis B.: I would like to give you a very satisfactory rating, but want to see how well you covered the different things that may come up.

From Sumayah S.: Good challenge.

Are you still skeptical about cryptocurrencies or their underlying blockchain technology? Or maybe you’re more worried about the stock market than the crypto market… Teeka’s an expert in both. Shoot him your questions right here…

IN CASE YOU MISSED IT…

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If you want to make a fortune from the pot bull market of 2018, you’re invited to join PBRG friend Nick Giambruno and special guest Doug Casey in this free training event.

Reserve your spot right here…