Bitcoin put a smile on investors’ faces last week…
Our favorite decentralized cryptocurrency surged to $31,400 on Friday.
That’s a 14% leap from where it was trading just last Monday. And it brings the gains for bitcoin investors this year to 83%.
Bitcoin is the bellwether of the crypto market. If it’s rising, the rest of the crypto market tends to do well. If it’s falling, it’s bad news for other cryptos.
And world-renowned crypto investing expert Teeka Tiwari believes bitcoin’s 2023 rally is just the start of a more sustained bull market.
That means now is a great time to put some opportunistic capital to work.
It’s all down to what he calls the “institutionalization” of crypto.
Before we dive in, a warm welcome to new readers…
The Daily Cut is the premium e-letter we created for paid-up Legacy Research subscribers.
It’s a bulletin of the best moneymaking ideas from Teeka, Nomi Prins, Colin Tedards, and Phil Anderson. We also feature insights from traders Jeff Clark, Larry Benedict, and Imre Gams.
At Legacy, we publish 22 investing and trading advisories. We also put out five daily e-letters.
Going through it all takes hours every day. Most folks don’t have the time. So, I go through it for you. And I put together a daily bulletin of their best ideas.
One of the most profitable ideas I’ve shared with you has been the rise of bitcoin and other crypto.
It’s been a roller coaster ride. But folks who have followed our repeated recommendations… and held on through the ups and downs… have been able to move the needle on their wealth in a meaningful way.
Teeka first recommended bitcoin in April 2016 when it was trading at just $428. Since then, it’s up 8,069%. That turns $10,000 into more than $800,000.
And it’s not even the highest gain at his crypto-focused Palm Beach Confidential advisory. Teeka’s top-performing recommendation in the model portfolio is up a whopping 20,933%.
That turns $10,000 into nearly $2.1 million.
And if Teeka is right, it’s not too late to profit.
It’s all down to Wall Street greed…
Teeka first brought it up in these pages in September 2018 when he discussed his bitcoin recommendation…
When you’re analyzing early-stage tech, you can’t let price be your only barometer. If you panic sell every time a speculative asset like bitcoin takes a plunge, you’re never going to make real money.
A much better metric to look at is the rate of adoption. Are more people using the technology? This is the important question you need to be asking, not what price it’s trading at today.
And as he’s been spreading the word on, the main driver behind adoption will be Wall Street greed.
Here’s what Teeka told folks at our 2022 subscriber summit in Washington D.C…
Bitcoin is a $1 trillion financial asset. The folks on Wall Street aren’t part of it. They’re not getting any of the fees associated with crypto trading. They see capital leaving the traditional financial system and going to this alternative system. So, now the traditional financial system is trying to co-opt bitcoin.
And we’ve been watching this play out in recent weeks…
On Tuesday, Schwab and Fidelity launched a new crypto exchange…
It’s called EDX Markets. And it’s not just backed by these two mainstream financial firms.
Ken Griffin’s Citadel Securities is also a backer. It’s one of the largest market makers in the U.S.
Unlike crypto exchanges Coinbase and Binance, which are in hot water with regulators right now, EDX won’t hold customer’s cryptos.
Instead, it will store customers’ cryptos at custodian banks.
And that’s a game changer.
Sam Bankman-Fried’s cryptocurrency exchange FTX went bust last November after he comingled customer funds with a hedge fund he ran. And regulators say something similar has happened at Binance.
With EDX, that can’t happen. So, investment managers can feel secure investing clients’ money.
Last week, BlackRock also filed for a “spot” bitcoin ETF…
There are already several exchange-traded funds (“ETFs”) that allow you to get exposure to bitcoin futures. These allow you place bets on bitcoin’s future price without owning it.
But so far, there’s no ETF that holds bitcoin on your behalf like gold ETFs do.
And that’s a big deal. A spot bitcoin ETF would give regular investors easy access to the cryptocurrency, for the first time, through their brokerage account.
If anyone can get a bitcoin ETF approved, it’s BlackRock. It’s the world’s largest money manager with $8.5 trillion in assets under management.
But BlackRock isn’t the only Wall Street heavy hitter that’s applied to launch a spot bitcoin ETF. So did WisdomTree. It’s the 10th largest ETF provider in the U.S.
As much as $1.3 trillion could find a home in crypto…
Jim Kyung-Soo Liew is an assistant professor of finance at Johns Hopkins University. He estimates that the ideal allocation to crypto for institutional investors such as mutual funds, hedge funds, endowments, and family offices is 1.3% of their portfolios.
This helps them diversify away from stocks and bonds. It also gives them a chance to significantly boost their returns.
Right now, their allocation to crypto is virtually zero. Professional money managers are wary of buying cryptocurrencies on the online exchanges individual investors use today.
But once they have the infrastructure they need in place, they can put a slice of their clients’ accounts into crypto.
According to Boston Consulting Group, there’s about $100 trillion in global assets under management.
If we see 1.3% of that flow into crypto, we’re talking about a roughly doubling of the size of the crypto market.
Right now, the combined value of all traded cryptos is $1.2 trillion. If we see $1.3 trillion in global wealth enter the market (1.3% of $100 trillion), the crypto market cap would swell from $1.2 trillion to $2.5 trillion.
That makes now a great time to put some capital to work in crypto…
Most Wall Street players have missed out on the gains in bitcoin so far.
They’re not going to make the same mistake twice. Some of the biggest financial firms in the world are building new platforms to allow their customers to trade crypto.
That’s why Teeka says bitcoin will hit $500,000 by 2025.
Bitcoin’s new supply will taper off over time until it reaches a hard cap of 21 million bitcoins.
This steady restriction of supply is baked into bitcoin’s code. No person, corporation, or government can change it.
And as demand goes up for an increasingly scarce asset, its price must rise. That’s just how markets work.
Regards,
Chris Lowe
Editor, The Daily Cut