Banishing A Bitcoin Bubble (2021)
“I bought Bitcoin at $3500. And I am a Hodler (hold on for dear life)!” our first reader says. “I am also invested in other cryptocurrencies and precious metals.
“By far, I have seen the largest gains in the crypto market. My stocks do okay — and have done for years — but the gains in the crypto market are just too good to pass up…even at my age!”
Another reader pushes back: ““Too big to fail? How long will it take before the taxpayer has to bail out the $2.2 trillion in assets when cryptos collapse? Been there done that!”
Our final contributor today says: “My crypto ‘fun account’ is currently up 300%.
“I bought the stuff because I believe there will be a new currency based on blockchain technology, and I’m conservative. Just waiting for big banks to buy crypto too.
“Musk bought a bunch of BTC. Thanks, Elon!”
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Your Rundown for Friday, Feb. 19, 2021…
Bitcoin Goes Mainstream…
“In 2017,” says colleague and technology expert Ray Blanco, “I predicted the Bitcoin bubble a few months before it all came crashing down.
“Cryptocurrency did just that in December 2017 through January 2018 — when from a high of almost $20,000 — Bitcoin’s price plummeted and continued to fall for the next two years,” he says.
“There was no telling what the price would do. It had no reliable trend that you could follow.
“Then October of 2020 hit and a new narrative started…
“Everyone expected Bitcoin to crash again just like it did back in 2017,” says Ray. “But something different happened.
“One by one, CEOs and institutional money started… announcing to the world they bought hundreds of millions or billions of dollars of Bitcoin.” First, Square (NYSE: SQ)… Then PayPal… And most recently, Tesla with its $1.5-billion Bitcoin purchase.
“Even more telling,” says Ray, “one-time critics of the cryptocurrency are jumping on board: Visa (NYSE: V) and Mastercard (NYSE: MA) have plans to integrate Bitcoin into their systems.
“Therein lies the difference between 2017’s bubble and today. Currency throughout history has needed power to make it legitimate.
“Thousands of years ago, gold was money. Civilizations would use it for the exchange of goods,” Ray says. “Today, the U.S. dollar is backed by the United States and its military.”
Mind-blowing blockchain technology notwithstanding, Ray says: “My main issue with crypto over the years? There was nothing to legitimize its use.
“But now corporations and institutions are buying Bitcoin by the billions,” says Ray, “and allowing their customers to purchase using their platforms.
“This gives it value,” Ray concludes. “This makes Bitcoin legitimate.”
Market Rundown for Friday, Feb. 19, 2021
S&P 500 futures are up 20 points to 3,930.
Oil is down 1.7% to $59.51 for a barrel of WTI.
Gold is down $2.60 to $1,772.40 per ounce.
Bitcoin’s up 1.7% this morning to $52,893.38.
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Stay well, and enjoy your weekend!
For the Rundown,