By Greg Wilson, analyst, Palm Beach Daily
“Is it too late?”
That’s been a popular question among cryptocurrency investors over the lifespan of the asset class. For example:
- In 2013, bitcoin ran from roughly $100 to $1,100. And investors asked, “Is it too late?”
- In 2017, bitcoin ran from roughly $1,000 to over $20,000. And again, investors asked, “Is it too late?”
- And despite its recent pullback, with bitcoin still trading above $9,500 (about 155% up off its recent lows)… investors are once again asking, “Is it too late?”
The answer back then and the answer now is still a resounding no…
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Take a look at the chart below. It compares the Crypto Winters of 2014–2015 and 2018–2019. And it gives us perspective on the volatile moves of crypto…
In 2014–2015, bitcoin was down 78% roughly 500 days from its peak. For comparison, bitcoin was down 73.3% over the same number of days in 2018–2019. So we were right on target.
And as you can see, we’ve emerged from Crypto Winter.
After seeing bitcoin’s recent breakout beating the 2014–2015 pattern in the chart, you may still be asking, “Is it too late?”
Again, the answer is: No, not at all.
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Growing Institutional Demand
We expect bitcoin to reach its previous high—then go multiples higher. And it’ll carry the entire crypto space with it.
Surges in both institutional and retail interest will lead this move higher.
On the institutional side, we’ve seen several major developments already:
- LedgerX (backed by Google Ventures) and ErisX (backed by TD Ameritrade) received Commodity Futures Trading Commission (CFTC) approval to offer physically settled bitcoin futures contracts.
- Bakkt, which starts testing its platform on July 22, should be next.
- In June, CME Futures set new highs in volume, accounts, and open interest.
- SWIFT, the payment protocol for banks, is enabling blockchain firms to use its platform. The global banking transfer system moves over $5 trillion daily.
- By the end of the year, JPMorgan Chase will start customer trials of its JPM Coin.
- And Goldman Sachs is doing extensive research on tokenization.
So it’s becoming a lot easier for institutional money to invest in bitcoin and cryptos.
Consider that the entire crypto space is relatively small at around $350 billion.
Global pensions and hedge funds alone have over $30 trillion in assets. If just 1% of these funds migrate to cryptos, the market would double from here.
Bottom line: Institutional demand will be a boon for crypto prices. But that’s not the only demand we’ll see…
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More Crypto Mania Ahead
On the retail side, we’re still a long way from the mania we saw at the end of 2017.
You can see this in the chart below. It shows the interest in bitcoin through the lens of Google Trends. And it’s a good way to gauge retail interest…
The blue line shows the bitcoin Google Trends data leading up to its 2017 high. The red line shows the current bitcoin Google Trends value.
Research shows the price of bitcoin is highly correlated to Google search trend results. In other words, as interest in bitcoin grows as shown in Google Trends, the price grows with it.
As you can see, retail interest is nowhere near the late-2017 levels. And by the time we reach those levels, bitcoin’s price will be well past its all-time highs.
That’s how we know it’s not too late to get in.
Now is a great time to use this pullback to add to your positions—before institutional and retail investors jump back in.
Remember, crypto is highly volatile and doesn’t go up in a straight line. So don’t bet the farm. You just need a small stake for the potential of life-changing gains.