By Justin Spittler, editor, Casey Daily Dispatch
“One of the Biggest Bitcoin Exchanges Just Added 100,000 Users in a Single Day”
“‘Buy Bitcoin’ Overtakes ‘Buy Gold’ as Online Search Phrase”
“Bitcoin Hits $7,000 as Wall Street Interest Gets Real”
Headlines like these are everywhere these days. They tell us that interest in bitcoin is soaring.
But it wasn’t always like this.
At the beginning of 2015, hardly anyone owned bitcoin. The entire market was worth just $4.4 billion.
Today, it’s a $113 billion market. That’s 26 times bigger than it was just five years ago.
When a market explodes like this, it’s only natural to label it a “bubble.”
But in today’s essay, I’m going to explain why the bitcoin market is about to get a whole lot bigger.
You might find that hard to believe. But you need to understand something…
• Institutional investors barely own any bitcoin…
Institutional investors include hedge funds, big money managers, and sovereign wealth funds.
They’re what’s called the “smart money.” They’re also usually the first to invest in groundbreaking technologies.
So why are they avoiding bitcoin? Simple.
They can’t own it.
You see, institutional investors manage trillions of dollars.
When you oversee that much money, the stakes are high. You need to be able to hedge your bets.
Up until now, institutional investors haven’t been able to do that. But that’s about to change.
• Soon, the CME Group will introduce its first-ever bitcoin futures contract…
The Chicago Board Options Exchange (CBOE) plans to do the same.
This is a game changer. You see, the CME Group and the CBOE run the world’s largest futures and options exchanges.
When they introduce these bitcoin products, it will be easier than ever for large institutions to bet on bitcoin.
And that will send billions of dollars into bitcoin. It could even cause the bitcoin market to triple in size.
That alone is a good reason to own bitcoin. But it’s not the only reason…
• We’re also on the verge of a major bitcoin supply crunch…
I’ll explain why in a minute. I’ll also show you how to profit from this rare market anomaly.
But let me first tell you a quick story.
The year was 2014. Oil was trading north of $100 a barrel. Its price had tripled in value since 2011.
Oil companies were making money hand over first. So, producers did what they always do when the price of oil is high. They pumped a lot more oil.
Below, you can see that U.S. oil production jumped 95% between 2009 and 2015.
At first, this was the right thing to do. But the industry eventually flooded the market with oil.
Oil went on to plunge 75% from June 2014 to February 2016.
• This sort of thing happens all the time in commodity markets…
Prices surge. Companies make more money. And they ramp up production to capitalize off higher prices.
Supply ends up outstripping demand. Prices fall back to earth.
That’s why people say “the cure for high prices is high prices.”
But here’s the thing. This cannot happen with bitcoin. That’s because the bitcoin supply will grow at a set rate, regardless of what its price does.
Let me explain…
• New bitcoins enter the market through a process called mining…
Now, people don’t mine bitcoins like you would copper or gold. It’s a digital currency.
Instead, people “mine” new bitcoins by completing complex math problems.
The mechanics of this are tricky. So, I won’t bore you with the details.
Just understand that the supply of new bitcoins decreases rapidly over time.
In fact, it falls by 50% every four years. This will continue until the very last bitcoin is mined in 2140.
• It won’t matter if the price of bitcoin hits $10,000, $50,000, or even $100,000…
This differentiates bitcoin from every other commodity on the planet.
Now, I know what you’re probably thinking…
“But bitcoin isn’t a commodity like gold or oil.”
You’re right. As Doug Casey recently wrote, bitcoin is money. It checks all the boxes.
But bitcoin is far more attractive than any paper currency. You don’t have to be an economist to understand why, either.
• Central banks around the world are destroying their own currencies…
They’ve done this by cutting interest rates to zero…and, in some cases, dropping rates below zero.
They’ve also created trillions of new currency units out of thin air since the last financial crisis.
These radical measures were supposed to “stimulate” the global economy. But regular readers know that didn’t happen.
Instead, all these central bankers have done is hurt everyday people who carry paper money around in their wallets.
Every paper currency in the world is now rapidly approaching its intrinsic value of zero.
Just look at this chart of the U.S. dollar.
It’s lost 97% of its value since 1913.
Keep in mind, the dollar is still the world’s reserve currency. Paper currencies in places like Venezuela, Zimbabwe, and other Third World countries are even more worthless.
• The good news is that this can’t happen with bitcoin…
That’s because bitcoin is a decentralized currency. There isn’t a central bank or government in the world that can manipulate its supply.
You should also know that only 21 million bitcoins will ever exist…and 16.7 million of those coins have already been mined.
That means nearly 80% of bitcoin’s total supply is already in circulation. The rest will slowly enter the global economy over the next 123 years.
Long story short: Demand for bitcoin is soaring. And there’s absolutely nothing the market can do to offset much higher prices.
So, consider speculating on bitcoin if you haven’t already.
Keep in mind, this is a speculation. So, don’t “bet the ranch” on bitcoin. The good news is that it only takes a little bit of money to make a fortune in cryptocurrencies.
New Orleans, LA
November 10, 2017
P.S. Now, I realize that most people don’t know how to get started buying bitcoin. That’s where our colleague Teeka Tiwari comes in.
Teeka is the editor of Palm Beach Confidential. He’s also one of the world’s top cryptocurrency analysts. This Wednesday at 8 p.m. ET, he’s holding a live Q&A session to help you learn more about the booming cryptocurrency sector. To join the VIP reminder service and enter your questions for Teeka, click here.
Today, high praise for Doug’s work over the years:
I wanted to say thank you for the content and honesty Doug Casey has produced over the years. He has helped me construct a better way of thinking through issues. I hope to meet Mr. Casey one day but if not I hope he enjoys his time knowing he has helped me. Thank you for your time.