Teeka Tiwari: Is This Time Different for Crypto?

Teeka Tiwari answers the questions like: Is this sell-off different? Will bitcoin and crypto rebound to new highs?

By Teeka Tiwari, editor, Palm Beach Daily

Over the last few weeks, I’ve received some worried emails about crypto volatility.

I understand the concern…

Since its $68,789 all-time high in November, bitcoin is down 55%. And the overall crypto market is down 56% in that time.

So readers are asking: Is this sell-off different? Will bitcoin and crypto rebound to new highs?

The short answer is yes. They will… because bitcoin’s story hasn’t changed.

Sure, there’s market uncertainty. And when there’s uncertainty, asset valuations decrease. But that won’t last forever.

Once sentiment recovers, the market will remember bitcoin’s adoption story… So it’s only a matter of time before it breaks old highs.

This is such a forgone conclusion for me. And I find it odd that people still doubt bitcoin’s future potential.

I’ve owned bitcoin from as low as $400 per coin to as high as $68,000 per coin… I’ve had to endure 80%-plus drops in value.

I’ve seen more 50% drops than I count. And yet all through that volatility, I’ve always known bitcoin would come back and make a brand new all-time high.

That’s why back in 2017, I bought more bitcoin at $16,000. It never crossed my mind to sell it when it crashed 83% to $3,000.

I knew bitcoin’s adoption story would eventually power it to new highs.

How do you figure the intrinsic value against something that doesn’t generate cash flows?

When it comes to new technology, you use Metcalfe’s Law.


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How to Value Bitcoin

Metcalfe’s Law states that the bigger the network of users, the greater the value of the network.

Think about the telephone…

There’s no value in a telephone network if only one person has a phone. If a second person gets a phone, the network becomes a little bit more valuable. But if everyone has a phone, the network becomes extremely valuable.

Take Amazon, for example. The network effect triggered enormous growth for the tech giant.

As more people signed up for Amazon’s Prime membership, its share price climbed from around $300 in 2014 to an all-time high of over $3,700 in 2021.

That’s a 10x gain in just a few years.

Bitcoin’s adoption is on the same trajectory as other groundbreaking technologies.

Crypto.com estimates there are 200 million people who use crypto assets. By the end of this decade, I believe at least 4–5 billion people will be using bitcoin.

And I’m not alone in this thinking…

According to former Google engineer Michael Levin, bitcoin’s current adoption rate puts it on track for 1 billion bitcoin users by 2025… about half the time it took the internet to reach the same milestone.

We’ll see multiple countries add BTC as legal tender and as a reserve asset in their central banks. And the price of bitcoin will be significantly higher.

That’s why over the coming years, I expect a single BTC will be worth $500,000.

So the adoption story alone will boost bitcoin’s value.


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Another way to project bitcoin’s value is to determine how much it could be worth as a store of value.

I believe bitcoin will eventually be a primary base layer of the global financial system… the way that government bonds are now.

Central banks around the globe will hold bitcoin as a reserve currency on their balance sheets, much like they do with gold and U.S. dollars. So that’s huge growth potential…

The value of the gold market is about $11.6 trillion. For bitcoin to just match gold, its market cap would need to increase 19x from where it is today.

Finally, we can value bitcoin based on the other assets it will partially or completely displace.

In the future, it’s my belief every asset will be tokenized. That means stocks, bonds, titles of ownership, music rights – everything of value – will have its ownership rights secured by a blockchain.

This will be wildly bullish for bitcoin…

The collectibles market is $412 billion… for bonds, it’s $119 trillion… for equities, it’s $120 trillion… and for real estate, it’s $326 trillion.

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Let’s be conservative and say bitcoin grabs just 1% of each of these markets.

Combining that with bitcoin’s projected $11.6 trillion market as a store of value would suggest about $17.3 trillion in additional value – or $823,809 per BTC in circulation.

That’s why I don’t sweat these pullbacks. In fact, I see them as opportunities to own more.

We’ve Seen This Before

I’ve been through numerous market pullbacks… and I’ve guided readers through several crypto sell-offs.

I’ve learned that when bitcoin sees a steep decline… it’s just a matter of time before it powers back to new highs.

Look at the chart below.

Since I first recommended bitcoin in April 2016, we’ve seen four pullbacks of 50% or more.

chart

And each time, bitcoin recovered those losses in less than 10 months on average… and then powered on to hit higher highs.

Of course, past performance is no guarantee. But with bitcoin’s history of resilience combined with its future upside potential, I’ll place my bets on another rally.

That’s because bitcoin is a world-class asset built for survival.

Bitcoin Is a World-Class Asset

In the stock market, world-class assets are blue-chips with pristine balance sheets… competitive moats… and above-average dividends.

In crypto, these are projects with widespread adoption by institutions and consumers… developing groundbreaking technology… and with high potential upside.

That’s bitcoin right now.

In April, Fidelity Investments announced it would become the first major retirement-plan provider to offer bitcoin in its 401(k)s.

Fidelity is the largest U.S. provider, with over 30 million 401(k) and retirement accounts.

Goldman Sachs recently became the first major bank to offer a bitcoin-backed loan when it let Coinbase use BTC as collateral for cash.


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And remember, bitcoin is on track for 1 billion users by 2025.

So that ticks the adoption box.

Last month, payments provider Stripe said it would resume bitcoin transactions on its platform. This is incredibly bullish for bitcoin.

Stripe suspended bitcoin transactions four years ago due to slower transaction times and higher transaction costs.

Now it’s partnering with crypto startup OpenNode, which uses the Lightning Network.

Lightning processes bitcoin transactions “off-chain,” making them faster and cheaper. It’s truly groundbreaking technology.

Next is upside potential… And despite its recent slide, Crypto Whales still see plenty of upside for bitcoin.

Billionaire Tim Draper has doubled down on his $250,000 bitcoin price prediction.

In 2014, Draper famously bought 30,000 BTC in a government-sanctioned Silk Road crypto auction. At the time, bitcoin was about $600 per coin.

And MicroStrategy CEO Michael Saylor believes a single bitcoin will be worth millions one day… (Saylor’s company is the largest corporate bitcoin owner.)

The current bear market in crypto hasn’t shaken their faith – and it shouldn’t shake yours either.


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This Time Is No Different

Bitcoin is 55% lower than its all-time high seven months ago.

At a minimum, I think it’ll rival the $11.6 trillion gold market. That means we’ll see at least $500,000 bitcoin.

If I’m right, bitcoin is wildly undervalued today.

If it retouches its all-time high, that’s more than a double from here. And buying it today could potentially result in a 17x gain over the next five years.

It’s one of the lowest-risk, highest-reward set-ups I’ve ever seen.

That doesn’t mean we won’t see more weakness this year. As I wrote, bitcoin is highly correlated to tech stocks right now.

And in short-term bear markets like today, tech stocks are highly volatile.

So we’ll see bitcoin move with the tech-heavy Nasdaq for the time being. You should view that as a gift.

Every time I’ve recommended bitcoin after a crash, it rallied to new highs. I don’t expect this time to be any different.

If you have capital available, consider adding bitcoin to your portfolio today.

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