My Secret Sauce to Crypto Success
Editor’s Note: Over the weekend, bitcoin once again soared to unprecedented levels. The cryptocurrency is now valued at about $9,700.
More than $300 billion is invested in cryptocurrencies globally. That may sound like a lot… until you consider that more than $6 trillion is invested in gold around the world.
In other words… as high as bitcoin has climbed this year, it still has plenty of room to run…
In today’s Energy & Resources Digest, Early Investing LLC co-founder Adam Sharp explains why the crypto boom is just getting started… and lays out the only crypto strategy you’ll ever need to succeed.
Read on and you’ll see why you don’t want to miss out on the digital commodity of the 21st century.
– Patrick Little, Managing Editor
The key to making money in cryptocurrency is simple.
Yes, you need good security too. But the most important thing is simply being able to hold on during volatile years.
Many are tempted to take profits after they’re up 2X or even 5X. Both would be a mistake (unless you desperately need the cash).
Let me explain why…
Cryptocurrencies are a (potential) monetary revolution, where bitcoin becomes a common investment asset and value transfer vehicle.
As I often point out, ownership today is tiny, with far less than 1% of the population owning any cryptocurrency (aka crypto) at all.
But adoption is accelerating incredibly fast. Let’s look at some metrics.
Coinbase, the largest U.S. cryptocurrency exchange, is adding around 55,000 new accounts per day.
In a month, that’s 1.7 million new crypto users (mostly bitcoin).
Let’s say half of those actually invest, and that they invest $3,000 on average (less than half a bitcoin). I suspect this may be a conservative average, but it’s hard to say.
This influx of new buyers from Coinbase would add more than $5.1 billion in buying pressure per month (if they each bought less than half a bitcoin).
The total value of all 16 million bitcoins in the world today is around $155 billion (with each coin worth around $9,700, as I write this).
On the supply side, currently 1,800 bitcoins are being “mined” per day. Not all of those are sold (but let’s pretend they are for this example). That’s $17.5 million in selling pressure from new coins per day. In a month, that’s $524 million worth of new bitcoins mined.
So from just one exchange, we have perhaps $5.1 billion in new buying pressure. And selling pressure from new coins is just around $524 million.
Let’s also factor in…
- That bitcoin owners are loyal and tend to stick around
- The dozens of other large exchanges around the world
- The influx of 130-plus hedge funds into crypto
- That there will only ever be 21 million bitcoins
- The upcoming futures trading via CME Group
- That after futures are live, exchange-traded funds will be far more likely
- That the big money players are dipping their toes in this market.
And there you have a recipe for a feeding frenzy of epic proportions.
Upside for Altcoins
Cryptocurrency owners tend to fit a pattern… They buy bitcoin first and fall in love with the idea of independent money.
Holders tend to do very well on their bitcoin, and eventually some of these profits make their way into “altcoins,” or alternative cryptocurrencies.
The lure of altcoins is simple. Many of them have borrowed from bitcoin’s code (it’s free to use) while improving on it in important ways.
They’re trying to beat bitcoin in transaction speed and cost (and a few are succeeding wildly). Competitors such as Ethereum add additional functionality, such as the ability to execute “smart contracts” on the blockchain, leading to endless potential applications.
Bitcoin will always have a special place in my portfolio. I’ll always own some. But much of my time is now spent analyzing its competitors.
It’s an absolutely fascinating field. Competition keeps the technology moving very fast. Some of the most talented developers in the world are racing to make their coins the best.
We just launched a new service based around smaller cryptocurrencies. It’s called Crypto Asset Strategies. The focus is on very early small cap cryptocurrency opportunities and initial coin offerings (ICOs).
Think of Crypto Asset Strategies as a small, intimate group where you’ll have access to these very early opportunities that can be shared with only a select number of people…
I believe we’re at just the beginning of the crypto boom… and that cryptocurrencies and ICOs will be the massively adopted early-stage funding mechanism of the future.
The ideal time to get in is right now.