On October 6, 1973, Egypt and Syria launched a surprise attack on Israel. The date was significant because it fell on Yom Kippur, the holiest day in Judaism.
This conflict would later be known as the “Yom Kippur War.”
As a tight-knit ally of Israel, the United States decided to provide swift military support.
To say this support didn’t go down well with the other Arab nations is an understatement.
The Organization of Petroleum Exporting Countries (OPEC) convened an urgent meeting to discuss sanctions against the U.S. and Israel’s allies.
Just 10 days later, OPEC declared an oil embargo in retaliation.
The U.S. imported 115.9 million barrels of oil in October 1973. By February 1974 that had dropped to 62.9 million – a huge 45% slump in four months.
OPEC wasn’t the only group the U.S. imported oil from… But clearly the embargo made a huge dent on supply.
This 45% cut caused oil prices to explode. In January 1973, the average import price for crude oil was $2.73 per barrel. By March 1974, it had soared to $11.10.
So in just over a year, supply constraints quadrupled the price of oil.
We saw a similar scenario play out with gold prices after the collapse of the Bretton Woods system in the 1970s.
This time, a significant rise in demand caused the price increase.
In the 1960s, the U.S. dollar was still pegged to gold. That meant other nations could redeem their dollar reserves for gold.
And that’s exactly what happened…
With government spending getting out of control due to the Vietnam War and Great Society programs… Countries began to dump the U.S. dollar and exchange it for gold, which they saw as a more stable store of value.
By 1965, France started to convert its dollar holdings into gold. And the country moved it out of the vault at the New York Federal Reserve. Others followed suit.
This led to the devaluation of the dollar. And a surge in demand for gold.
From 1972 to 1973, net speculation and investment demand for gold went from negative 102 metric tonnes to 546 metric tonnes.
And by 1980, investors traded 34,000 tonnes of gold on U.S. exchanges – 25 times the global production.
So it’s no surprise the price of gold skyrocketed from $35 per ounce in 1971 to $850 in 1980 – a 2,328% increase.
These are just two examples of how prices can skyrocket when supply decreases or demand increases…
With oil, it was a massive supply cut. With gold, there was a massive increase in demand.
Now, imagine what happens when you combine a massive supply shock like we saw during the OPEC oil embargo…
With a massive demand shock like we saw with gold after the collapse of the Bretton Woods system.
I’m telling you this because we’re about to see a similar dynamic play out in bitcoin…
When Supply and Demand Clash, Prices Explode
If you’re a longtime reader, you probably know the supply-side shock I’m talking about is the “bitcoin halving.”
If you’re unfamiliar with the halving, let me explain one of the most important tenets of bitcoin that gives it value…
There can never be more than 21 million bitcoins in existence. Their issuance is strictly regulated by bitcoin’s code.
To maintain scarcity and prevent inflation, the code mandates a “halving” every 210,000 blocks on bitcoin’s blockchain (roughly every four years). Each halving reduces the supply of new bitcoin coming to the market.
When bitcoin miners validate transactions, they receive a reward of newly created bitcoin for their services. The halving event cuts the reward miners earn – and the new amount entering the market – in half.
The first halving occurred in 2012. The second in 2016. And the third in 2020. The fourth will occur in April 2024.
The chart below shows what happened to bitcoin’s price after each halving.
But it’s not just bitcoin’s halving that’s going to cause the explosion I see on the horizon. There’s also a demand-side shock coming.
On January 10, the Securities and Exchange Commission (SEC) approved 11 spot bitcoin exchange-traded funds (ETFs), including those from BlackRock, Fidelity, VanEck, Invesco, and WisdomTree.
Combined, these 11 firms have $17 trillion under management.
What makes this so crucial to the demand side of the equation is these ETFs must buy and hold bitcoin for every dollar that enters their ETF.
For example, if BlackRock’s bitcoin ETF swells to $20 billion in assets under management, it must own and custody $20 billion worth of bitcoin.
This will open the floodgates to billions of dollars in capital – a huge surge in demand.
We believe the launch of a spot bitcoin ETF will similarly bring in millions of new crypto buyers.
According to one survey, 88% of financial advisers interested in purchasing bitcoin are waiting until after the SEC approves a spot bitcoin ETF.
That approval is done. Now they have no excuses to not get their clients into bitcoin.
This suggests an ocean of capital is waiting to get into this asset class.
So let me set up the opportunity for you as simply as possible…
If the demand story plays out as we expect… and you combine it with a guaranteed supply cut from the halving… Where do you think bitcoin prices will go next?
That means the potential for $100,000, $500,000, or even $1 million per bitcoin is very possible.
A Bull Market for the Ages
In his most recent video update, Daily editor Teeka Tiwari predicted a two-year bull run for crypto.
“Friends, the prices ahead of us are going to be awe-inspiring and shocking. We’ll see a bull market for the ages unlike anything we have seen before,” he said.
I completely agree with this take from Teeka. I’ve lived and invested through four previous crypto bull markets, each one bigger and bolder than the previous. But at some point, there won’t be much left of the bitcoin pie once the big institutions fill their ETFs.
Frankly, the chance to get a big enough bag of bitcoin may be running out.
It’s why these next two years may be the last to make a serious dent to your own bitcoin holdings. And then with extra capital you’re ready to risk, it may be the last major crypto bull market where those seemingly impossible gains are possible once again.
It starts with bitcoin. Then when you see just how much potential profit is on the table in the rest of the crypto market, altcoins in your crypto portfolio are the clear and obvious next step.
Teeka believes the coming shock will send hundreds of tiny crypto coins soaring 10x, 50x, or 100x higher – in just days.
To help you prepare, he’s revealing his #1 FREE crypto investment for 2024 – no strings attached. Click here to get the ticker.
(As a reminder, Teeka’s free picks have an average peak gain of more than 1,000%.)
This might all seem like it’s already too late.
But let me say this clearly now: It’s not too late.
It’s not too late to build an arsenal of top-flight crypto in preparation for this next bull market.
It’s not too late to get more bitcoin (or even just some to start with if you’re still not over the line yet).
And it’s not too late to carve off that small bit of capital you’re fully prepared to risk in this market and take aim at some high-octane opportunities.
The time is now. The rest is up to you.
So click here to watch Teeka’s briefing. And position yourself before this shockwave hits the entire crypto market. If you wait too long, it may be too late.
Until next time,
Sam Volkering
Analyst, Palm Beach Daily