Market Update on Crypto- with Celsius Network.
We need to keep talking about Crypto.
Whether you like it or not, it's here to stay. There's far too much investment in the space, with too large of institutions and investors that support it for it to go away.
I wanted to focus this week's Beat to offer more insight as well as resources to help start you with your crypto investments. I spoke with the folks over at Celsius Network recently, and I am really excited to share with my readers a great way to start investing into Bitcoin, Ethereum, and the rest of the emerging crypto world.
What's been going on:
It's been almost 5 months since I wrote, "Casting a View on Crypto" and since then the crypto market has seen quite a lot of action.
As a weekly blogger, it can be nearly impossible to fully capture every news update that the crypto market has. Just since that blog was written on May 16th, take a look at the price volatility of Ethereum and Bitcoin:
As far as asset classes go, (yes, this is an asset class at this point) there has never been anything quite like what we are seeing in the crypto space.
On Tuesday April 13, Bitcoin hit its all-time high at $64,899. Just 3 months later, Bitcoin would get cut more than half down to 29,000. Very few assets can see nearly 50% drawdowns in 3 months and still remain relatively on course as far as the speculation and narrative around the investment is concerned.
One of the many things I find fascinating about the crypto space is the difference in psychology surrounded by the community of investors within it. True crypto believers and investors will stare down a 50% drawdown and laugh in its face.
Oh, Bitcoin dropped 30k in 2 months? That's cute. I'll buy more. Ethereum's market cap cut in half in 3 days? Great news, its on sale and I'll take some more please.
This mindset has helped drive what is inarguably one of the greatest bull-runs an asset class has ever seen.
Where we are now:
The price of BTC and ETH have been surging lately, with the price of BTC approaching those all-time high levels from this year. As I write this on October 17th, Bitcoin is trading at $61,100 and Ethereum is sitting right around $3,900.
Over the last month, that's roughly 28% increase on Bitcoin and 12% on Ethereum. What is causing the bounce off of the lows from July of this year?
It may largely be due to the potential Bitcoin ETF that is currently being proposed to the SEC.
Now, if you have been following crypto, this is not the first time we have heard the rumors of a Bitcoin ETF. And while there are publicly traded crypto companies that already exist such as $COIN, $OBTC and $GBTC, none of these names are valued at EXACTLY the price of Bitcoin or the correlating crypto currency. They trade in relation to crypto, but do not give investors direct exposure to the digital assets.
The creation of an ETF approved from the SEC will be absolutely MASSIVE for the crypto community. Although we have begun to see institutional buy-in this year from all the large banks and other key players in the advisory space, an ETF that can be given the stamp of approval from the SEC will provide a whole new flock of investors that have been waiting for the green light to jump in.
Now, for the most part my readership here on the BonkerBeat is a younger demographic that has grown up with mobile-phone technology. The millennial investor has jumped on board to crypto at a much faster pace than the Gen X or the Baby Boomers. Us crazy millennials feel more comfortable downloading an app like Robinhood or Celsius (More on them in a minute!), and depositing cash to get a taste of some of that tasty "digital gold" if you will.
However, while this has been great for the social adoption narrative, unfortunately we millennials don't have all that much cash to throw at a more speculative asset like $BTC or $ETH. That's where the Boomers come into play.
As the SEC comes around to Bitcoin, and more traditional advisory practices start having more confident conversations about crypto as an asset that deserves SOME level of allocation to a portfolio, we will start to see more flows into crypto from older investors that have more cash on the sidelines than the younger investor.
As I have said in previous blogs, I AM NOT A FINANCIAL ADVISOR AND THIS SHOULD NOT BE TAKEN AS LEGAL FINACNIAL ADVICE, but I personally believe that it is totally fair and reasonable to allocate 2-5% of your investable cash into crypto.
Now to 25 year old that might only have $10,000 to invest set aside, that may only be $500 to throw into a Celsius account and play around.
But if we start to see older higher net-worth individuals start to allocate even a 2% portion of their investable assets into BTC or ETH, we can start to see sizeable shifts to the market caps of these digital assets.
"But Gordy- why would an older investor take on a speculative investment that is way higher on the risk curve closer to retirement? They need to make sure that money is there for them in retirement!"
Listen, I get it. And I don't refute that fact either. The older you get and further along in your wealth-building journey you get, you should be taking less risk. But that's not to say you can't be taking any risk.
Even if we only see 1% allocations in professionally managed portfolios of older individuals, that is still 1% more volume than was there before. My point I am making here is: We are still early in the adoption of investing into cryptocurrency.
Check out this illustration below that depicts the adoption cycle of new technology:
I believe we are somewhere in the Chasm currently.
As the technology advances, and more use-cases are discovered for crypto, we will continue to see investor sentiment gradually become more comfortable with the idea of owning crypto in their portfolio.
Where We Are Headed:
I am not going to be able to sit here and give a price prediction on BTC or ETH for this month, this year, or even this decade. What I will do is say that I believe that the technology is still in its early stages, and there is significant growth ahead. I would not be shocked in the slightest if we are at $80,000 BTC to close this year, nor would I be shocked if we say $30,000.
We will likely see periods of extreme volatility as we have seen over the last few years in this asset class. I do believe most dips will be met with buying, as we have to remember there is still a lot of cash on the sidelines, and as I mentioned last week, low interest rates are changing investors risk tolerance completely.
In the long run, I can see BTC reaching a market cap comparable to what we see in gold today. Currently, BTC total market cap is right around $1 Trillion. Gold currently fluctuates around 10-11 trillion. So even BTC gets to HALF of Gold's market cap, that would still value Bitcoin at roughly $250,000 a coin. Will it happen? I don't know. But I can certainly see it.
Here's $50 of Free Bitcoin to get you started:
If you have not invested into crypto yet, I have a great option for you to dip your toes into the water and start building up your crypto portfolio.
I am partnering with Celsius to offer you an additional $50 in free Bitcoin when you download their app and buy or transfer $400 in Bitcoin! All you need to do is hold that Bitcoin for 30 days, and there will be a $50 deposit of Bitcoin into your account after the waiting period.
What is Celsius?
Think of it just like an investing platform like Robinhood, but strictly for crypto. Once you make a Celsius account, you can buy, sell, and hold all forms of cryptocurrency, while also making interest on it while you hold it.
According to their website, "Celsius is proud to provide a platform of curated services that have been abandoned by big banks – things like fair interest, zero fees, and lightning quick transactions. Our goal is to disrupt the financial industry, one happy user at a time, and introduce financial freedom through crypto."
I went through this process myself with my friends over at Celsius, and I can 100% attest that to the $50 deposit entering my account after 1 month! I also have been taking advantage of earning 5.35% interest on my Bitcoin, and 6.20% interest on my Ethereum holdings.