In yesterday’s Daily, I told you how the late Charlie Munger, a noted technophobe, made one his biggest investment hauls from a technology play.
In 2008, Munger advised his long-time Berkshire Hathaway partner, Warren Buffett, to invest in a private Chinese electric vehicle (EV) and battery maker called BYD.
Munger’s BYD investment was so successful because he was early on the EV narrative that would send investment markets into full-blown euphoria in the subsequent years.
My point yesterday was this: The right investment narrative at the right time can unleash “animal spirits” on the market. And those animal spirits drive prices higher.
Munger was able to position Berkshire in the EV narrative early. And it turned into one of the biggest wins of his career.
In 2008, BYD’s private shares traded for around $1.02. At that time, Berkshire took a 20% stake worth about $230 million.
Today, BYD shares trade for around $25 – a 2,350% rise from 2008. And Berkshire’s current stake (it has sold a bit over the last few years) stands at $3.9 billion.
Like EVs, the crypto space has strong narratives of its own that have consistently driven the market to astonishing bull runs. And there are three huge narratives right now that I’m expecting will slingshot the crypto market to new highs in 2024.
I, of course, am not alone in this view. Daily editor Teeka Tiwari has been laser-focused on these narratives too and has been getting the narratives in crypto right since 2016.
Get the Narrative Right and Profits Will Follow
For example, when Teeka first recommended bitcoin in 2016, the main narrative around crypto was privacy.
As Teeka wrote in November 2016, bitcoin was (and still is) a hedge against the encroachment of central bank digital currencies.
Friends, this is the direction the whole world is going in. The U.K., Russia, and China are all looking to launch their own form of digital fiat money. And the reason why they want to do this: It’s another level of control.
They see currencies like bitcoin as a direct assault against their control over money. Once they move to a cashless society, not only can they view every single thing that you buy, but they also have the ability to tax every single transaction that takes place. Everything from selling some junk in a yard sale to selling some collectibles that you might trade with other collectors.
Make no mistake, this is a grab for your capital, and this is a grab for your currency. But fortunately, there’s a way out: bitcoin.
And the reason why is – you don’t have to be a rocket scientist to figure it out – the world wants its privacy back. The world doesn’t want to put all its money into the hands of central bankers that can tax it and take it at will. That’s why these alternative investments, like bitcoin, I believe deserve a place in everybody’s portfolio.
This was a powerful narrative for bitcoin ownership. And as Teeka predicted, bitcoin adoption exploded, and the price followed.
Since Teeka recommended bitcoin and Ethereum in April 2016, they’ve seen peak gains of 18,287% and 54,100%, respectively.
Other privacy coins, such as Dash, Monero, and PIVX, rocketed 24,783%, 54,100%, and 542,300%, respectively, over that same period.
The next major crypto narrative Teeka identified started to unfold in 2018. Teeka referred to it as the year of Wall Street greed.
Here’s Teeka from March 2018…
Wall Street has a history of using “narratives” to drive investment decisions. The internet “new era” and the “housing plateau of prosperity” are two good examples of these narratives.
The new narrative emerging from Wall Street is that adding cryptocurrencies to institutional portfolios will help tame volatility. And that is going to take the cryptocurrency market to new heights in 2018.
Admittedly, Teeka was a bit early on this investment narrative.
Bitcoin hit a then-record high of $19,900 in December 2017. We then slipped into a brutal, two-year Crypto Winter.
But during those lean years, Wall Street was aggressively building on-ramps into crypto. And by November 2021, bitcoin had hit an all-time high of $69,044.
From March 2018 to the peak of the 2020–21 bull market, other altcoins Teeka recommended like Uniswap, Ripio Credit Network, and Chainlink saw peak gains of 1,382%, 1,390%, and 6,100%, respectively.
As you can see, each new narrative sets the crypto market up for new all-time highs.
What makes the crypto market so exciting is that narratives come around repeatedly over time through each bigger cycle.
These narratives start in a Crypto Winter, gather momentum as the market starts to recover, and explode as exhilaration and euphoria grip the market as it rises to its new peak.
Right now, my research is telling us we’re at the start of a new bull market. And there are big narratives building that I expect will push this cycle, just like the previous ones, to new all-time highs.
Three Major Crypto Narratives in 2024
Moving forward, we see three major narratives that will propel the crypto market into its next bull market.
Artificial intelligence (AI).
According to consultant firm PwC Global, AI is the largest megatrend of our generation. It estimates it will create $15.7 trillion in new wealth. It will seep into every aspect of our lives and into every industry on Earth.
But where a huge opportunity exists is the intersection of AI and blockchain-based crypto networks. This will come through AI developments like recording data, deploying AI agents, open and accessible AI platforms, and access to AI and high-performance computing power.
The convergence of AI and crypto might just become the biggest technological trend of our lifetime.
Bitcoin Layer-2 scaling technologies.
Bitcoin is secure. It has never gone offline or been hacked. It’s the strongest and most robust network that you’ll find in crypto.
Despite all of its advantages, there are arguments that Ethereum is more relevant and important to a future of decentralized finance and networks than bitcoin.
But what if there was a way to do everything Ethereum can do using the strength, stability, and reliability of bitcoin’s network? This is the promise behind bitcoin Layer-2 scaling technology.
There’s a growing ecosystem around bitcoin, from DeFi platforms to non-fungible tokens, gaming, and wallets. It’s a fast moving and exciting narrative that’s building momentum.
Decentralized physical infrastructure (DePIN).
“Smart” technologies are all around us, whether it’s your smartphone, smart appliances, or high-tech car.
Today, these devices are connected to networks through the traditional internet channels. They’re predominately controlled by Big Tech and often vulnerable to attack.
Blockchain networks are much more secure, open, and accessible. And that’s where DePIN comes in.
There are many facets to DePIN ranging from car connectivity to logistics and supply chain tracking to data storage networks and even micropayments between connected machines and devices.
According to crypto research firm Messari, the addressable market that DePIN could disrupt is worth $2.2 trillion. And it could scale to reach $3.5 trillion over the next four years. That includes sectors such as cloud, wireless, sensor, and energy networks.
DePIN means the potential for secure and connected technologies where anyone can use them and generate wealth and value from their data and activity on the network.
These are three of the more significant narratives that I’m expecting will propel the market higher.
Each in its own right isn’t some pie-in-the-sky idea. They’re tangible, real-world, long-term technology disruptions that are more than just the idea of “token price goes up.”
It’s these deeper narratives that will impact how our world connects, transacts, and interacts that we expect will open up the biggest potential in a new crypto bull market.
Of course, that means there are several cryptos involved in each of these narratives that we think investors can profit from in this bull market.
If you want a deeper dive into these ideas and the specific cryptos, we go into them in the January issue of Palm Beach Confidential. Paid-up subscribers can read it right here.
Heading Down the Crypto Rabbit Hole
For many people, though, the idea of a new crypto bull market might still feel like a stretch. And the idea of crypto might still be a foreign concept.
That’s why we always say to position yourself in this market, you need to just take the first, easy step into it. And when you see how easy that can be, the rest quickly falls into place.
That first step starts with bitcoin. Once you’ve positioned yourself with exposure to bitcoin, you’ll be ready to head down the rabbit hole into the big narratives of the coming bull market: AI, bitcoin Layer-2s, and DePIN.
And Teeka has found another way to make huge profits from AI…
Recently, he unearthed a company he believes will end up supplying Tesla CEO Elon Musk with a key piece of technology for his new AI venture.
He even traveled to the Arizona desert to see the new facility this company is building.
It will be a game-changer for AI. And after his investigation, Teeka believes this AI stock has more upside than popular AI stocks like Nvidia.
Until next time,
Analyst, Palm Beach Daily