Chris note: If you’ve been reading The Daily Cut, you know cryptos are rallying again after 18 brutal months. And many people are wondering what it means. That’s why, over the past two days (catch up here and here), we’ve turned the Cut over to Teeka Tiwari.
Teeka is a world-renowned crypto expert. His track record of helping readers through both the good and bad times in crypto is unmatched.
And below, in the last essay in our crypto series this week, Teeka shows us why you should consider investing in altcoins as well as bitcoin as this bull market unfolds…
Since the beginning of the year, bitcoin has outperformed the cryptocurrency market as a whole.
Many investors fear “altcoins” (all other cryptos) will get left in the dust. Some folks have even asked me if they should sell all of their altcoins and go all-in on bitcoin.
That would be a mistake. Let me explain why…
Every time crypto emerges from a brutal bear market, bitcoin rallies first. But the altcoin market eventually catches up. And in many instances, it even surpasses bitcoin.
In fact, we’re seeing that happen with some altcoins…
Since the bottom in December, bitcoin is up 171%. The rest of the crypto market is up 165%.
But in the past few days, altcoins have started to close the gap. They’ve surged by 3% to 15% on average, while bitcoin is up about 1%.
That’s why I’ve been counseling patience. This bull market is unfolding exactly as it should – with bitcoin leading the way and altcoins playing catch-up.
In fact, today I’m going to show you why the rally in front of us will be so much bigger than what we’ve ever seen – not just for bitcoin, but for the whole crypto market…
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As I’ve said before, cryptos are unlike other asset classes. They don’t react to the vagaries of the business cycle.
For instance, if you have a recession, real estate prices go down. If you have a trade war, earnings take a hit and stock prices go down.
But the only asset in the world I’ve discovered that trades completely independent of the business cycle is cryptocurrencies.
That’s because they’re uncorrelated assets. Here’s what I mean…
Correlated assets move together in price direction. For example, large-cap companies usually move in the same direction as the S&P 500.
Then there’s assets with inverse correlations. These move in opposite price directions. For example, when the U.S. dollar goes down, gold prices usually go up.
But uncorrelated assets are unaffected by the forces that affect correlated assets. And that’s why Wall Street loves them.
You see, a portfolio made up of highly correlated assets reduces risk-adjusted performance – which is how most major institutions grade funds. But adding uncorrelated assets to the mix can increase risk-adjusted returns.
And right now, traditional asset classes – stocks, bonds, and commodities – are mostly moving in sync with each other.
So I’ve been saying for years that we’d see institutions add bitcoin to their portfolios to smooth out volatility and increase risk-adjusted performance.
Over the past few months, I’ve been traveling and meeting with “bitcoin whales,” money managers, and family offices. And I can tell you their appetite for all crypto assets – not just bitcoin – is exploding.
In the future, crypto assets will be in every major institutional portfolio. And that’ll happen because studies show they can make more money and lower their overall risk by adding them.
Look, institutions want to be in the crypto market. They just don’t have the infrastructure to get into it – yet.
But people are building the “on-ramps” and “off-ramps” that’ll allow the big money to easily get in and out of crypto assets. By year-end, institutions will have fully compliant platforms they can use to buy, sell, trade, and store cryptos.
Think about it like this: America didn’t build a highway system overnight.
Early U.S. roadways could handle no more than two cars, some horses, maybe a few bicycles, and pedestrians. The U.S. couldn’t experience a surge in commerce between states until it built the necessary infrastructure.
But you needed permits for that. You had to negotiate with each county to build highways through it. And it took years to do so.
The same is true with bitcoin right now. It wasn’t initially built for a massive onrush of institutional capital. But people are finally building those roadways.
Names like Fidelity, Gemini, E-Trade, and Coinbase… they’re all building the highways to connect institutional capital to the crypto markets.
Even Facebook is rolling out its coin to 2.7 billion people. These are soccer moms and people who aren’t necessarily interested in crypto… But all of a sudden, they’re going to be educated on crypto by one of the largest companies in the world.
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All along, I’ve been saying 2019 would be the year of Wall Street greed. That’s why this rally doesn’t surprise me – and it shouldn’t surprise anyone else, either.
We’re only at the very beginning of this move. And the prices we’ll see as institutional money comes into the market will be unfathomable.
The bottom line is this…
We’ve sat through 18 months of a horrible bear market. The hard part is over. So now’s the time to add new ideas and be patient as this new, emerging bull market takes shape.
Because you haven’t seen anything yet.
Let the Game Come to You!
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Teeka Tiwari
Editor, Palm Beach Confidential
Chris note: Last night, Teeka held a live Q&A. And thousands of your fellow readers tuned in…
For two hours, Teeka answered your questions… He talked about a new tax announcement from the IRS – and what it means for crypto investors… And he revealed a new catalyst he believes could send bitcoin soaring even higher this year. If you missed it, watch it here.
READER MAILBAG
On Monday, we asked you: How are you taking advantage of Crypto Spring?
Here’s what one of your fellow readers wrote in…
I have been buying an altcoin position every single week since March 2018. I was trading crypto and building positions for about 10 months prior to that time as well.
At this point, I have quite a few open positions and I’m just trying to keep them safe – about half on exchange and half in private cold storage. I like to keep some liquid just for moving on highly volatile price gains (it’s tough busting out the cold storage at the drop of a hat or if you aren’t physically present).
However, I am playing the long game and I look forward to this huge run up that is coming. Teeka has been instrumental in helping me select key positions and weather the storm of the Crypto Winter. His experience and wisdom is absolutely game-changing, and I thank Teeka from the bottom of my heart.
As a crypto investor/trader, I am looking to this space to jump-start my life back on track after having a devastating few years financially, which left me with severe debt and stuck in a job that I absolutely hate.
I hope this market proves us crypto bulls right so that I can transition full time into trading and programming blockchain, data analysis, and front-end application development. Warren Buffett, eat your heart out! I will take my “rat poison squared” with a cup of tea!
Thanks, Teeka and Daily Cut, for keeping the faith!
– Brendan V.
Switching gears to another big trend on our radar – the rise of autonomous electric vehicles…
On Tuesday, we asked if you would ever buy a self-driving car. And we’ve been getting mixed responses…
I find it amusing that people can say, “I won’t buy an autonomous vehicle.” In some cities, in the future, you won’t have a choice. Cars that are not tied to the grid, conversing with the cars around them, with the street, with traffic signals, will not be allowed in our largest cities.
It will be a “safety” issue and then be used as a measure of control. Step out of line, and your car will deliver you up to the local authorities. Same with ride-hailing services, if you don’t own a private car.
– Dana M.
From what I have read, they are many times safer. They should almost eliminate auto accidents. Since a huge percentage of drivers are doing so while distracted, it would be nice to have cars on the road that don’t get distracted. I’ll buy one when they are economical.
– Gary W.
I can’t wait to watch the self-driving cars run in the Indianapolis 500. It will be interesting to see which sponsored AI can outsmart all the others. And no worries about drivers getting injured.
Better stick to liquid fuel. All those batteries can add a lot of weight. Or maybe a pit stop will be to see how quickly they can get charged.
– Larry L.
Will self-driving cars make our streets safer… Or are they just another tool for the authorities to control us, like Dana M. thinks? Write us at [email protected].
And if you still have crypto questions after Teeka’s live Q&A last night, keep them coming. Every Friday in our mailbag editions, we turn to the Legacy team – including Teeka – for answers.
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