Investors are taking bitcoin to the woodshed.
When I (Chris Lowe) recorded this week’s video update yesterday, bitcoin was down 31% from its peak in April.
As I type, it’s down 43%.
If you’ve heard the wailing and gnashing of teeth in the mainstream media, you may think this is terrible news.
But we see this kind of volatility as the price you pay for the chance to make life-changing gains in crypto.
And as you’ll see in this week’s update, the bigger the drop in bitcoin’s price, the bigger the rally that follows afterwards.
It’s all in your Weekly Pulse video at the top of the page. It’s where I (Chris Lowe) and host Tom Beal break down the single most important market story on our radar for the week.
Regards,
Chris Lowe
Editor, The Daily Cut and Legacy Inner Circle
P.S. If you prefer to read along, we’ve included a transcript of our conversation below.
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Transcript
Tom Beal: The historical data we’re going to show you today shares that the larger the bitcoin drop, the larger the rally and gains that come afterwards.
My name is Tom Beal, host of the Weekly Pulse, where we break down the biggest wealth-growth story of the week. I’m here with Chris Lowe, editor of Legacy Inner Circle.
So Chris, a lot is happening. Where do we begin today’s conversation?
Chris Lowe: Well, Tom, I think if anyone has been following our advice and owns some bitcoin, they’ve had a pretty tough couple of weeks. Bitcoin is down 30% from the high it set on April 13th, which is something that coincided with that Coinbase IPO, the online cryptocurrency exchange.
Since that moment, bitcoin has been on the decline. And I know it is very tough to hold onto an asset through a 30% decline. So I thought what we’d do this week is just look at what’s happened to bitcoin and try to put it in some historical context.
Then, at the end, I want to pass on the advice that our world-renowned crypto expert here at Legacy, Teeka Tiwari, has been giving his readers.
Tom: I agree. If I didn’t have your recommendation to follow Teeka and pretty much all he says, I’d be fearful. But I have total certainty. I’m excited to show the data to back up the fact that when there’s been those significant dips, it’s just a matter of time before not only does it correct, but reaches new highs.
I’m excited to show this to our viewers as well.
Chris: Tom, I’m putting a table up on the screen now that looks at the major corrections in bitcoin, going all the way back to 2010, which is about a year after bitcoin launched.
It’s an interesting table. You can see there’s been 13 declines of 30%. Well, the first one was 29%, but let’s say around 30% or more.
Some of them are incredibly steep, Tom. One started on December 17, 2017. Bitcoin dropped 84% all the way through to December 15, 2018. That was a year-long correction for bitcoin. So we’re talking nearly three times the drop we’ve just been through.
There was an 85% drop then in 2013, starting on November 30, 2013 and going all the way through to January 14, 2015. So again, just this incredible long drop.
Then there was a drop of 76%, a drop of 94%. This is going back to the early days of bitcoin in and around 2011.
So 13 declines of 30% or more. Several of them 90%+, 80%+, 70%+.
So what we’ve been telling folks – and what is the message of this video – is that this is just bitcoin being bitcoin. If you bought some bitcoin because you see the potential for mass adoption that Teeka has been talking about, and we’ve been talking about on these Weekly Pulse videos, 30% is nothing.
What you have to get into your DNA when you’re a bitcoin investor, even more so than when you own tech stocks or anything in the stock market, is that this is a highly volatile asset.
Tom: Right, and the data shows it. The good news is, if you follow Teeka and our other expert advice within Legacy Research, you see the future. If we could fast forward in a time machine to a year, two years, five years from now, we’d be, just like we would now, looking back when bitcoin was $300, $3,000, $5,000 and be like, “Why didn’t I get more at that time?”
So if you see that longer picture, you’re not panicked. You’re actually like, “Okay, great. So I might pick up a little bit more now at a discount and see how it all unfolds.”
So I’m thankful you showed that data that gives a sense of the timeline of what’s happened. And with that volatility. Yes, it’s not been simple for people that don’t have that future vision of where it’s heading. But those that hung on are reaping the benefits.
Chris: Yeah. And I think the very important thing about this table is that I have looked at the very steep declines, and I’ve shaded them in red. But then I’ve shaded the subsequent rallies after those declines, and I put the really big ones in green. And if you notice, they nearly lineup exactly.
I mentioned that decline that began in December 2017 and lasted all the way until December 2018 – bitcoin dropped 84%. Guess what happened next? It rocketed 534% higher.
Go to the 2013 decline that began in November and ended in January 2015 – bitcoin drops 85% and then it rallies 585%.
Look at that decline that began in June 2011 and lasted through to November 2011. That’s when bitcoin lost 94% of its value. But the subsequent rally was an absolute barnstormer. Bitcoin gained 1,504%.
So the bigger the declines, the bigger the rallies that come after them. The smaller declines, you still get rallies after them, but they’re not so big.
The framing for this, Tom – and we talked about it before on these videos, but I think it’s very important now, considering we’re in a declining period for bitcoin – is that this volatility is the price of admission when it comes to making life-changing gains in crypto.
That has been Teeka’s mantra, going all the way back to April 2016, when he started recommending it in Palm Beach Letter and Palm Beach Confidential. And when we started recommending it, based on Teeka’s insights, in Legacy Inner Circle [July 2016].
Teeka got his readers in at $428 a bitcoin. We were a little bit later, it was $650, $660 by the time we started talking about it. But bitcoin hit a high of $63,000, and now, we’re at $44,000. The gains are immense.
What Teeka is telling his readers is treat this pullback as what it is – an excellent buying opportunity. A lot of this pullback has to do with Elon Musk tweeting that bitcoin is an energy hog. I don’t know why he’s doing that because he actually bought bitcoin recently, knowing it was an energy hog. And then put out a tweet saying bitcoin uses a lot of energy, which everyone knows anyway.
So a lot of this is very short-term. It’s being pushed around by guys like Musk. And it’s absolutely no reason to change your long-term view of bitcoin.
We can do another video on bitcoin’s energy use. It’s something Teeka has been digging into for his readers, so I think it’s a good topic for another video. I’m not going to get into that here.
Really, what I’m going to say here is look at that table. Make sure you imprint it in your mind that if you’re holding bitcoin, the price of admission for those life-changing gains is you’re going to go through big drops, and 30% is nothing. If bitcoin drops another 30%, it’s totally normal. It’s going to be within range.
Now, the good news, Tom, is that Teeka believes that because crypto is gaining mainstream adoption, because it’s getting more liquid, there’s more money in it – it’s a trillion-dollar asset now – the volatility, that kind of 94% decline or that 85% decline, Teeka believes that those days are probably over. But still, we’re going to see 30%, 40%, 50%, 60% pretty easily.
And the bottom line is if you sell out when bitcoin is declining, you’re just guaranteeing you’re going to lose money. You have to have a long-term time horizon. You’ve got to understand the basics of why bitcoin is valuable in the first place.
It’s very simple. It is a decentralized global payments platform that’s been up and running for 10 years. You can’t forge bitcoin. You can’t hack it. You don’t need central banks. You don’t need banks. The fees are lower. The list goes on of the reasons to own bitcoin.
So it’s very important not to just tune into price and blindly think, “Oh, I’ll buy this because it’s going up.” Make sure you understand it. Make sure you have a long-term time horizon.
And then just tune out the volatility. Just forget about it and say, “Look, I understand bitcoin is going to go up and down. I knew that when I bought it. I’m just going to let it go up and down as it does. It’s volatile. And over time, I believe in the long-term hypothesis that bitcoin is going to be at the center of the financial system as a store of value and a digital gold.”
And you’re able to get into that digital gold at still very cheap prices.
Tom: Yes. And inside the Legacy Inner Circle members area, you can reference more of what Chris mentioned along with a lot of other experts, Teeka and others, in one of the four megatrend reports, the one on cryptocurrencies, that gives you that foundation at a nice level to see where it is and where it’s going.
Chris, this reminds me of back when stocks had a big dip after the coronavirus. And if people freaked out and sold, they saw some massive losses. Whereas if they held out, and they thought this will rebound, not only did they recoup those losses, but they saw some pretty large gains. And I think that’s definitely in store.
We don’t have to have a crystal ball to realize, looking at the data that you showed earlier, that it’s dropped. But in the past, when it’s dropped, it’s skyrocketed afterwards. So hold tight and stay along for the ride.
Chris: Tom, you mentioned the stock market, you’re absolutely right. Warren Buffett is one of the best investors alive. One of the greatest track records of any living investor. His mantra is, “Buy when others are fearful, and sell when others are greedy.”
Well right now, investors in bitcoin are obviously fearful. It’s a great buying opportunity, as Teeka says.
There was all this stuff back in 2016, 2017, when we were really banging the drum on bitcoin, that you had all the Wall Street great and the good, JPMorgan Chase CEO Jamie Dimon, coming out and saying, “It’s a fraud. It’s a Ponzi scheme.”
Now, the mantra on Wall Street is, “It’s environmentally damaging.”
All of this stuff is flotsam and jetsam, in my opinion. It’s just different phases that people go through and try to ding bitcoin.
The long-term trend towards mass adoption is still intact. As Teeka’s been telling people, financial powerhouses on Wall Street, like Goldman Sachs, Morgan Stanley, JPMorgan, they’re all pouring billions into plans to offer bitcoin to their customers.
I think we can wrap up with something that Teeka said, which is, “Watch what Wall Street does, not what it says.”
Wall Street understands what’s happening. They’re investing billions. They might say it’s an energy hog and all this stuff. They’re probably trying to get better prices for themselves.
Just zone it out and stick to the long-term trend. Teeka’s been recommending this stuff since 2016. He has never once freaked out, Tom. He has never said, “Sell your bitcoin.”
He’s had that long-term vision. And it’s stood his readers in very good stead. Many of them are writing in saying, “We’ve become millionaires from your recommendations in crypto.”
So if you want to follow them along that path, you just have to be able to ride out volatility and have that long-term horizon.
Tom: Thank you, Chris, for bringing that peace of mind to me a long time ago. There were times when there were those dips where I was fearful. Should I get out now? Is it going to go to zero?
Now that I see, not only is Teeka and many others in this field and experts inside Legacy Research, predicting it. If you can jump in that time machine five years from now, you’ll be like, “Man, I wish I would have gotten more when it had that drop,” because of where it’s going to be.
So stay tight, have confidence, and follow the guidance that Chris brings to you through the Legacy Research experts, namely, in this particular instance, Teeka Tiwari. Follow Teeka’s advice, hold tight.
And actually, if you can, it might be a great buying opportunity to get more. Just like the data showed, it’s at a discount right now. So grab it up.
Thank you for bringing that to our attention, Chris. Anything else to wrap up today’s discussion?
Chris: What I’d like to get across to folks watching this is that having a good investing idea is really only half the battle. You see these tweets all the time. They’re really heartbreaking. They’re from folks who bought a bitcoin at 60 cent or $1, and then they’d sell out at $8. They’re like, “Wow, I made loads of money. Lucky I didn’t sell out at $4.” They have literally lost multi-million, even billion-dollar fortunes.
I read one guy, I think he bought 1,700 bitcoins at 12 cents, or something ridiculous, and just didn’t have someone like Teeka alongside…
The experts at Legacy don’t just come out of nowhere. Teeka was working on Wall Street when he was 19 years old. He ran his own hedge fund. Teeka has gone bankrupt. He has made many fortunes and lost many fortunes.
And guess what happens when you have that kind of life – you learn lessons. You learn painful, but crucial, lessons about how to actually make money in the markets.
You can have all the good ideas in the world, but if you don’t have someone like Teeka holding your hand, being there to guide you through these difficult moments, you’re really not going to get much out of the markets.
That’s what we do at Legacy Inner Circle. We do it in The Daily Cut, too. We try to walk our readers through these ideas and make sure that they get the maximum from them by just reassuring them when stuff like this happens, talking about the long-term, and trying to help them not make those rookie mistakes that can devastate you as a wealth-builder in the markets.
Tom: Great insights, Chris. Thank you once again for bringing your wisdom and the wisdom from the Legacy Research experts, in this instance, Teeka Tiwari. Thanks again.
Chris: Thanks Tom.
Tom: If you’re still here, that means you’re not yet part of Legacy Inner Circle.
We’ve talked in this episode about the power of having Teeka’s advice related to bitcoin. Chris has that unique perspective to look into the entire Legacy Research experts’ model portfolios and see why they’re receiving such amazing gains.
So Chris, for those who aren’t yet part of Legacy Inner Circle, why is now a good time to take a closer look and join us inside the members’ area?
Chris: Tom, I think what a lot of folks watching this video may not understand is that we have 13 paid advisories under the umbrella of Legacy Research.
That’s the publishing alliance behind Teeka Tiwari, Jeff Brown, Nick Giambruno, David Forest, Jason Bodner, Bill Bonner, Doug Casey. Some of the greatest newsletter advisors ever assembled, in my opinion. I don’t know a better group of independent investment experts giving their advice to regular folks.
You may have already signed up to one or maybe a couple of advisories from either one or a couple of these experts. But what Legacy Inner Circle does, as far as I know, is unique in the newsletter publishing industry.
We assemble all of those experts, and we’re able to look at all the research they put out. I have them on speed dial. I talk to them regularly. And what we try to do for Legacy Inner Circle folks is put that one really big story on their radar per week. Whatever it is that’s really popping, either in one of the model portfolios or just an idea that someone is really passionate about.
Or sometimes we start to see that a number of our experts are coalescing around one big idea. And that’s when we pass on that research to our Legacy Inner Circle members.
I talk to them on Zoom calls, like the one we’re having today. I sometimes talk to them by phone if I can’t reach them by Zoom, and we publish the audio. So it’s like having these guys as your personal investment advisors.
Now, we’re still publishers. It’s not personalized investment advice. That’s not something we do. But we are able to pass on the very best ideas to our readers. And that’s just not possible if you’re subscribed to, say, just a tech letter or just a commodities letter or just a gold letter. You’re going to miss the big picture.
We focus very much on the big picture trends and simple ways to play it.
We’ve looked at bitcoin. We were very early, as I said earlier, April 2016. We were early on legal cannabis stocks, back in May 2017. And we’ve talked about tech metals, that’s lithium and nickel and copper, and these metals that are needed very much for the electric vehicle revolution. We’ve looked at CRISPR gene editing.
It’s a ton of different ideas. All of them ideas that one of the experts at Legacy is extremely excited about and pounding the table on for their readers.
But if you’re only subscribing to one or two newsletters, you’re going to miss out on a lot of those ideas. So we try to make sure that our readers never miss a big idea from the Legacy team. That’s how I’d put it, in short.
So if you’re just starting out, and you’re trying to find your way in the markets and figure out what it is that you enjoy researching and enjoy investing in, I think Legacy Inner Circle is a fantastic introduction to the different views, the different perspectives, the different ideas.
And if you’re a long-termer in the newsletter world, and you’ve been subscribing for a while, Legacy Inner Circle just opens up your vista a good deal. You can start to see, “Oh, I didn’t know we had this trading service. Or I didn’t know we also looked at commodities,” for instance, if you’re a tech guy.
So it’s just an insight into these different parts of the market. They’re all areas where some of our readers are profiting. But we try to make sure that Legacy Inner Circle members are aware of that 360 view of the markets.
And we can pinpoint experts when something is doing very well and bring deeper insights than they get, say, in something like The Daily Cut.
So it’s deep dives into the big money-making ideas from the Legacy team.
Tom: A hundred percent correct. And I recommend you click the link below, learn more about Legacy Inner Circle.
And you’re going to gain access to these four reports. These are the four megatrends that aren’t even going to be discussed yet in the video you’re going to see at the link below.
These alone would be worth your minimal investment because as a Weekly Pulse viewer, Chris and the team have put together a ridiculously amazing offer for you to join – for literally about what it costs for a Venti at Starbucks.
You get access to everything, nothing held back.
So click the link below, go get access to Legacy Inner Circle via this limited-time special offer. And we look forward to seeing you inside the members’ area and inside the iOS and Android app. So join. We’ll look forward to seeing you there.
Thank you again, Chris.
Chris: Thanks, Tom.
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