Every day, I receive hundreds of messages from concerned subscribers asking if it’s too late to own bitcoin.
Bitcoin has skyrocketed from less than one penny in 2008 to over $1,600 today.
Over the same span, the market value has gone from virtually zero to over $24 billion.
Since I recommended bitcoin to my subscribers in April 2016, we’re up 288.1%.
Surely the run must be over, right?
Actually, I think the run is just getting started. In fact, I’m betting bitcoin will go much higher…
Regular readers know three main reasons I’ve been so bullish on bitcoin:
- It’s a great chaos hedge against the War on Cash.
- It has numerous features for making private transactions.
- And its underlying technology—the blockchain—is revolutionizing industry after industry.
But there is a bigger reason I think bitcoin will rise even higher: It’s the reserve currency of the entire cryptocurrency space.
Here is why that matters…
The World’s Standard Currency
Reserve currencies play an important role in global trade…
Say you are a trader who lives in Argentina or Egypt and you wanted to buy gold.
Before you could purchase your gold, you’d have to convert your local currency into U.S. dollars.
The same is true for almost all commodities, like sugar, corn, wheat, iron, etc. Nearly all of them are priced in U.S. dollars.
There are a number of reasons why commodities are priced in U.S. dollars. But here’s the simplified version…
It’s easier for buyers and sellers to have one standard to gauge commodity prices. Otherwise, you’d need to convert numerous currencies each time you wanted to buy a commodity.
(For instance, a trader in Japan would need to convert their yen into Saudi riyals for oil, Peruvian sol for gold, and Colombian pesos for coffee.)
The United States has the world’s largest economy. And the U.S. dollar is the dominant global currency.
So it made sense to use the dollar as the world’s currency standard. If I’m a Japanese trader, I can convert my yen into dollars and then buy oil or gold or coffee.
All other currencies are measured against the U.S. dollar. And that makes the U.S. dollar the world’s most “in-demand” currency. Even when our politicians do dumb things, the dollar still has value because it underlies all global trade.
This creates an ongoing demand for dollars.
Building Up a New Reserve
Just like the U.S. dollar, bitcoin has a special “status.” Nearly every other cryptocurrency in the world is priced in bitcoin.
To buy most other cryptocurrencies, you need to buy bitcoin first… Just like you need to buy dollars before you can buy most internationally traded commodities.
This makes bitcoin a de facto reserve currency.
As we see more of the world’s “paper” wealth roll into cryptocurrencies, we’ll see bitcoin gain “official” status as a reserve currency. And that will create more demand.
Today, traders, investors, and merchants keep U.S. dollars on hand when they need to buy commodities. Soon, they’ll need to keep a stock of bitcoin at all times so they can buy other cryptocurrencies.
But what’s great about bitcoin is that unlike the U.S. dollar, bitcoin can’t be devalued. You can’t just “print” more bitcoin into existence.
It’s programmed so there will never be more than 21 million bitcoins.
So what will happen as the demand for bitcoin explodes while the supply remains fixed?
It will continue to trade much higher.
Today, somewhere between 6 and 11 million people own bitcoin.
To put that number in perspective, more than 167 million people own stocks, bonds, and real estate.
With a potential market of at least 161 million people, I think it’s a smart bet that bitcoin is going to go much, much higher in price.
Let the Game Come to You!
Editor, Palm Beach Confidential
BIG T’s 3-MINUTE MARKET MINDER
Bitcoin Is Going Mainstream and That Means Bigger Profits Ahead
Bitcoin is breaking out to all-time highs. As of this writing, it was trading above $1,750. It’s up over 288% since we recommended it last year.
A major reason for the cryptocurrency’s charge higher is that it’s starting to gain mainstream legitimacy. That’s because many U.S. states are passing laws and regulations that recognize cryptocurrencies and blockchain equities.
In today’s must-see 3-Minute Market Minder (transcript included), Palm Beach Confidential editor Teeka “Big T” Tiwari says there’s still room for bitcoin to run. As more states embrace bitcoin, the price will go much, much higher…
Raising the Platform: Legendary investor Warren Buffett is singing the praises of platform companies. Most of these companies are in the tech space. In the past, Buffett avoided them, preferring instead to buy traditional businesses like railroads, utilities, and manufacturers. He told investors at his annual shareholders meeting last week that platform companies are now the “ideal business.”
If you follow the Daily, you know we’re big fans of platform companies. The five biggest U.S. companies by market capitalization are all in this category (Apple, Google’s parent company Alphabet, Microsoft, Amazon, and Facebook. Buffett’s own Berkshire Hathaway is sixth). In fact, we predict one of them will become the first U.S. company to be worth $1 trillion.
Bitcoin Pays the Bills: An Australia-based startup has created a service that allows citizens in the country to pay their household bills with bitcoin. The company is called Living Room of Satoshi. The new service supports payment for utility bills (including water, electric, and gas), school fees, and even credit cards. You can check out the company’s website right here. (Note: The service is only available to Australia residents.)
Driving Off a Cliff: Ally is one of the biggest subprime auto lenders in the United States. It blamed its recent bad quarter on a 6.7% decline in used car prices. Santander Consumer USA is another big subprime auto lender. It saw profits fall 31% last quarter. And it just reported a 21% drop in subprime loan originations. Now, major lenders are pulling out of the fragile auto loan market.
Subprime loans have become a major pillar of the auto loan market. But that pillar is starting to give way. And our friends over at Casey Research say the crisis in the subprime auto loan market is just the tip of the iceberg…