I mean, there are roller coasters…and then there’s bitcoin.
The last year has been epic in so many ways. The world’s #1 cryptocurrency raced to more than $60,000 this spring from just $9,000 a year ago. And then it fell back into the $40,000s, before racing back toward $60,000…before falling out of bed this week and at one point collapsing to around $30,000 before immediately shooting back up to its current price near $40,000.
You need some kind of G-force protector for your neck to prevent whiplash with this one.
In April, friends and colleagues were asking me if they’d missed the bitcoin bull market.
Today, friends and colleagues are asking me if the bitcoin bull market is dead.
Here’s what I’m telling them…
To be sure, bitcoin trading right now is as volatile as a manic-depressive on a mood swing. But, frankly, that’s the nature of brand-new assets—and particularly one that is fundamentally changing the world.
When all of this shakes out, one truth will emerge: Bitcoin, cryptocurrency, and the technology behind them, called blockchain, are the future of pretty much everything.
Not just money, mind you…everything.
Of course, you can be forgiven for distrusting that assessment, given what we’ve seen in the last few days and weeks. And, honestly, I was once right there with you.
Five years ago, I scoffed at bitcoin, and crypto in general. I dismissed bitcoin simply because I didn’t take the time to understand it.
Looking back on that moment, I see my problem: I listened to the mainstream media. They bashed bitcoin. They highlighted the risks and never addressed the opportunity. They were wedded to warning people away from bitcoin because the reporters and the editors themselves didn’t have any idea of what they were writing about.
As such, they didn’t connect the dots to the future. It was easier to simply call bitcoin a failure and warn readers away from it, as Carnegie Mellon professor Vivek Wadhwa did (so astoundingly wrongly) in a Washington Post piece in early 2016, when bitcoin was less than $400. Anyone like me who paid attention to what Wadhwa and others wrote missed out on gains of about 12,400% in those five years.
In the end, it took a phone call from my son in 2017 to push me to look at bitcoin. And still, it took me a while to come around.
You see, I come out of the serious, sober world of The Wall Street Journal, where I spent 17 years as a financial writer. I also was a trader for a hedge fund. I believe in stocks. But my son convinced me to at least consider bitcoin. I told him I would.
So…I researched it. And I realized that what I thought I knew about bitcoin was, well, totally wrong.
I saw that the mainstream view of crypto was largely uninformed. The media saw bitcoin as this crazy, controversial electronic “currency.” In their mind, bitcoin served no real purpose in wider society, and certainly not in the serious world of real currencies like the U.S. dollar.
They viewed (and still view) bitcoin as nothing more than a speculative asset…something to buy low and sell high.
But what they missed was that bitcoin was never just about the price of the coin itself. Bitcoin has always been about something far, far greater—a new financial order. It is about creating an asset impervious to government intervention and the deliberate destruction of the dollar and other fiat currencies.
As it is now, the Federal Reserve can create new U.S. dollars simply by adding them electronically to a ledger (meaning, technically, the dollar is a digital asset just like bitcoin).
Today, only 10% of U.S. dollars actually exist in physical form, and every new dollar the Fed conjures up electronically reduces the value of every dollar in existence. That’s why our hard-earned dollars are worth less and less with each passing year.
Bitcoin is the anti-dollar. It’s increasingly difficult to create and it has a finite supply—what real money is supposed to be.
As someone who has written a lot about spiraling U.S. debt and the never-ending erosion of our dollars, I reflexively understand bitcoin’s utility and the problem it addresses. And I saw where it’s going to lead us…to a world without banks, or real estate agents, or insurance companies, or so many other institutions that have been the foundations of our financial lives.
I know how that sounds… impossibly crazy. Trust me or not, it’s still going to happen, no different than Amazon destroying bookstores, or Booking.com erasing travel agents.
It’s still a few years away (though it’s coming faster than most people imagine).
However, I’ve always been an investor who likes to arrive to the party early, when the host isn’t even dressed yet and they’re still running around trying to tidy up the place. You look awkward and you have to sit around for a long while as nothing happens…but then, boom! Everyone starts showing up, and fun things happen, and you’re there for all of it.
In investing terms, that’s where the big money is always made.
I finally began getting into bitcoin in the $3,000 range in 2017, never once thinking: “I hope I’m not overpaying—I hope I’m not late to the party.”
And here we are today…
Bitcoin is in the $40,000 range, and despite its price volatility, it’s ultimately headed well north to…well, I’ll let you read about that in my Crypto Intelligence Library, because I’d rather you hear the whole story than just read a number without the broader context.
So, have you missed the bitcoin boom? Is the bitcoin boom over?
Yes, I know it can be scary—intimidating—to contemplate a currency so different to what you and I grew up with. I’m right there with you—or, rather, I was. Until the call from my son that prompted all my research.
The bitcoin party is underway, for sure. But it’s early. Everyone’s still on their first glass of wine and stuck on awkward small talk. Soon, though, things are going to truly get going and when they do, you’ll be glad you were early to the festivities.
Life-changing gains are still to be made in crypto.