The price of one bitcoin is, as of this writing, $51,360.37. I say “as of this writing” because, by the time you read this, that number is likely to be higher. At least, that’s what we’ve seen with Bitcoin, as well as just about every other cryptocurrency, over the past six months.
To illustrate this point, consider that Bitcoin’s price has spiked nearly 315% since the middle of August. Oh, and over that same time period, the benchmark domestic equity index, the S&P 500, is up slightly more than 16%. That move in the S&P actually is very robust by index standards, but when it comes to Bitcoin and cryptocurrencies, a 16% move is a like a day’s pay.
So, is it any wonder why cryptocurrencies have become all the rage on both Wall Street and Main Street?
Now, in the interest of full disclosure, readers of my Fast Money Alert and Bullseye Stock Trader advisory services have been profiting bigtime from the move higher in cryptocurrencies. In fact, on Tuesday we realized a gain of 101.07% on one common stock position and a 378.42% gain on a call option position — all in just one week! (No, that is not a misprint).
We also continue to have exposure to several positions that are profiting from the Bitcoin craze, including one stock that’s up nearly 170% in just a few weeks and another that was up 140% in just over one week. Notice here that I said stocks, and not a cryptocurrency or bitcoin itself.
You see, I am a stock picker at heart, and while I won’t hesitate to recommend hard assets, real estate or digital assets when the time is right, I always prefer actual companies run by smart people engaged in in the enterprise of providing a good or service for a profit. Because in my universe, “profit” isn’t a dirty word, it’s a sacred word.
Another word I consider sacred is one that many Americans also hold in a consecrated fashion, and that word is “freedom.” And when it comes to Bitcoin and the promise of cryptocurrencies, freedom is, in part, at the heart of its appeal. Indeed, the popularity of cryptocurrencies is actually rooted in libertarian ideas about the need for a stateless, distributed, noninflationary currency that can be more private, and more secure, than traditional dollars.
More importantly, cryptocurrencies are seen as a way to eliminate the middleman, i.e., to finally be rid of governments and their central bankers, and to liberate money from the hands of Big Brother and put it back into the hands of individuals.
Of course, this is a big undertaking, and one not likely to be adopted anytime soon. Yet in a provocative opinion piece at the website Coindesk.com, Alex Treece, co-founder of fintech platform firm Zabo, argues that adoption of Bitcoin as a reserve asset by the U.S. government would be in our strategic best interest.
And in my opinion, that could be a good way to begin the process of making Bitcoin the new buck, i.e., replacing fiat currency with cryptocurrency. As Treece explains it, the reason the U.S. government should embrace Bitcoin as a reserve asset is simple economic self-interest:
“In the near term, there exists an irresistible arbitrage opportunity for a country silently to accumulate a bitcoin position and later announce its holdings… It finally happening would send an ultra-bullish signal and vaporize doubts among traditional investor holdouts, including other central banks. The resulting adoption acceleration would bestow huge windfalls for early adopter countries who managed to accumulate early in this transition.”
Self-interest is always a key ingredient when it comes to necessary change, and though I don’t expect the United States to abandon the dollar anytime soon, having an early position here in Bitcoin could put our country in a very strong position. Moreover, this will be especially important because of the fact that the U.S. dollar is currently the global reserve currency.
Rival countries Russia and China have already been building out their dollar alternatives via the accumulation of massive gold reserves, especially over the past several years. And as Treece explains, “Their overall goals are clear: create alternatives to the current U.S. monetary hegemony. As bitcoin continues to gain adoption and becomes a global reserve asset, it will be thrust into this great competition between nations.”
Treece finishes his opinion piece with the following provocative observation: “If America’s rivals embrace bitcoin first and take advantage of the reserve asset arbitrage, not only will they secure a once-in-a-generation economic windfall, they will also be in position to damage U.S. foreign policy and strategic interests. Fortunately, the U.S. can avoid this outcome, if it acts boldly and embraces bitcoin first.”
This most interesting take on Bitcoin, the dollar and rival nations is something I am going to be watching over the next several years, and most likely beyond, because if the situation plays out problematically for the dollar, that will have serious implications for everyone.
In the meantime, it only makes sense for investors like us to take advantage of this tremendous wealth-creating wave that is cryptocurrencies. And as I’ve told you already, you can do that without actually owning any cryptocurrencies directly.
Next Thursday, Feb. 25, at 2 p.m. Eastern time, I will be holding a live online cryptocurrency summit that we’ve titled, “My $20 Backdoor Bitcoin Play.” This summit is free, but you do need to register to attend. So, simply click the link here, and get ready to find out more fascinating facts about cryptocurrencies — and how you can make huge profits from this tsunami-like wealth creation wave.
On Living Forward
“Life can only be understood backwards, but it must be lived forward.”
The existentialist philosopher is telling us that it’s impossible to really understand your life in the present moment. That understanding only comes in retrospect, and even then, that understanding will likely only be temporary. The reason why is because life consists of forward motion that demands you constantly take new actions and make new choices. And those forward actions also will likely change your past understanding, as your new experiences become integrated into your thoughts. So, always remember that life must be lived forward — and know that the present moment is all any of us really have.
Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.