Editor’s Note: Three months ago, bitcoin was trading at $3,600. This week, it blew past $8,000. That’s more than a 100% gain in just a few weeks. But this shouldn’t come as a surprise…
Last month, world-renowned cryptocurrency expert Teeka Tiwari told me bitcoin was headed much higher.
I’m sure our readers want to know if this is a short-term spike or the beginning of a new crypto bull market. So I tracked down Teeka after his long flight from Canada back to Puerto Rico to get his take…
Editor: Thanks for taking time to talk to me, T. Last month, you told us bitcoin was going “a lot higher.” Can it continue climbing?
Teeka: This is the very beginning of a much higher move. In fact, I think bitcoin is reaching escape velocity.
You see, this recent rally is happening while the trade war between China and the U.S. is heating up.
And here’s why that’s important…
Investors are concerned tariffs will hurt stocks—and sold… Since President Trump began ratcheting up his rhetoric last week, the S&P 500 is down 4%.
Now, I think this is just a short-term dip for stocks. But I’m not saying it won’t go any lower, either… In fact, I’ve even established new positions to take advantage of this pullback.
Still, the trade war is just an overblown story. A deal will get done. Both President Trump and President Xi are pandering to their constituents. They’re just playing hardball to not appear weak.
The bottom line is: China needs us more than we need them. So the U.S. has the upper hand. And eventually, we’ll get a trade deal because of it.
In the meantime, trade war fears will impact stocks. But for bitcoin, this is irrelevant.
Bitcoin is completely disconnected from the business cycle. Do you know of any other asset like that?
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Editor: I can’t think of any. But why does that make bitcoin a good investment?
Teeka: Because it’s an uncorrelated asset.
Now, correlated assets move together in price direction. For example, large-cap companies usually move in the same direction as the S&P 500.
And assets with inverse correlations move in opposite price directions. For example, when the U.S. dollar goes down, gold prices usually go up.
But uncorrelated assets are unaffected by the forces affecting correlated assets. And that’s why Wall Street loves them.
You see, a portfolio made up of highly correlated assets reduces risk-adjusted performance—which is how most major institutions grade funds. But adding uncorrelated assets to the mix can increase risk-adjusted returns.
And right now, traditional asset classes—stocks, bonds, and commodities—are mostly moving in sync with each other.
So I’ve been saying for years that we’d see institutions add bitcoin to their portfolios to smooth out volatility and increase risk-adjusted performance.
In the future, crypto assets will be in every major institutional portfolio. That’s why I called 2019 the year of Wall Street greed. And as we can see by bitcoin’s recent price action, that narrative is emerging.
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Editor: Can bitcoin handle this tidal wave of institutional money headed its way?
Teeka: In short, yes. The price will have to go up, but bitcoin can handle it.
Naysayers have argued that bitcoin can’t handle any more traffic because it slows down the network and makes transactions expensive.
At one time, that was true. But not anymore. Solutions like the Lightning Network enable thousands of transactions per second.
Look, we didn’t build highways across the country overnight. It took years—even decades—to build the interstate system.
In the 1930s, the U.S. mostly had dirt roads. And that was fine for the time. But today, we can transport millions of people and trillions of dollars in goods across the interstate system.
And bitcoin is experiencing that same type of transformation now.
Right now, it’s a tributary of minor roads built for people on bicycles. It wasn’t initially built for 18-wheelers… But that infrastructure is finally coming together. And it’ll change the face of crypto and bitcoin.
So when Wall Street can pile in its 18-wheelers full of cash into bitcoin, it’ll push the entire crypto market up—probably higher than you think is possible.
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Editor: And what should crypto investors do now?
Teeka: Start your positions and hold on… And like I always say, let the game come to you!
Editor: Thanks for the update, Teeka.
Teeka: You’re welcome.