Analyzing the recent bitcoin action … what’s happening in the broader altcoin world … why this asset class deserves your “strong hands”
After peaking around $42,000 earlier this month, bitcoin began sliding — down roughly 30% top-to-bottom before an uptick starting a few days ago.
That uptick just turned into an explosion.
Below, you can see bitcoin soaring from below $32,500 to over $37,000 in the last 24 hours.
So, what do we make of the weakness before this latest pop? And is this recent surge just a head-fake before another longer pull-back?
After all, many crypto analysts were saying bitcoin climbed too far, too fast, and a correction is in the cards.
Looking beyond bitcoin, what about altcoins? Many of them traded significantly lower in the wake of bitcoin’s weakness.
What does the future hold there?
Today, we’ll answer these questions with the help of our crypto expert, Matt McCall, by taking a look inside his most recent issue of Ultimate Crypto.
For newer Digest readers, Ultimate Crypto is Matt’s service dedicated to the explosive world of altcoins.
I don’t use the word “explosive” lightly …
Matt launched the service last January, beginning with a handful of elite altcoins. Today, the portfolio has expanded to 13 positions, which average a return of 245% as I write, Friday morning.
There isn’t a single negative position. One altcoin is up over 1,000%. Eight out of the 13 positions are up triple-digits. And Matt’s two latest recommendations (made about two-and-a-half weeks ago) are both approaching 100% gains as I write.
I include this information to illustrate the wealth-generating ability of this asset class.
Yes, crypto can be volatile. Yes, you should wade in carefully. But the potential for outsized gains is enormous, perhaps more so than any other asset class.
So, today, let’s get Matt’s latest thoughts on what’s around the corner for crypto.
***Bitcoin’s recent weakness was a good thing
As noted a moment ago, bitcoin fell sharply from its high earlier this month (until the last 24 hours). But there’s far more going on here than how it appears on the surface …
As bitcoin doubled from $20K to $40K in less than a month, it was the hot topic among investors and even others around the globe. I find it interesting how quickly that changed. Bitcoin suddenly was no longer the hot topic.
Take a look at the search interest in bitcoin from Google Trends:
Is that cause for concern?
Just the opposite.
As a contrarian — which early investors often need to be — this is great news.
The hype surrounding bitcoin hitting a new high is starting to fizzle. That makes for healthier trading no matter the asset.
It’s like a stock breaking out and subsequently pulling back.
Bitcoin pulled back in price, and the drop in interest is comparable to that pullback coming on light volume.
Matt notes that if you know anything about technical analysis, you recognize how a breakout followed by a pullback on light volume is often a great buying opportunity.
This last 24 hours have certainly proved him right …
Plus, if you look at the broader macro reasons for investing in bitcoin — unmanageable government debt, trillions of dollars of newly-minted currency, zero-percent interest rates — has any of that changed?
Of course not.
So, why should the long-term outlook for bitcoin have changed?
***Well, what about recent negative headlines about a “flaw” in bitcoin?
And what about new Treasury Secretary, Janet Yellen, and her comments about possibly curtailing bitcoin and other altcoins?
Are these reasons to be bearish today?
Back to Matt:
You may have seen a report last week that claimed there is a flaw in bitcoin’s blockchain that results in “double spending,” or the same coin being spent twice. If it were true, that would be a big problem, and those concerns sent the crypto down over 10%.
But the report was quickly refuted by people who actually understand how bitcoin works, and I also agree that the report was not accurate …
Adding to the already cautious sentiment were comments from new Treasury Secretary Janet Yellen. The former head of the Federal Reserve said that the U.S. government should consider curtailing bitcoin and other cryptos.
I’m not concerned because I don’t see how the government can succeed in tampering the growth of cryptos, but those kinds of comments — misguided as they are — do scare enough people to have a short-term affect.
The idea of scaring investors brings to mind the concept of “weak hands” versus “strong hands.”
In investment parlance, weak hands refer to traders or investors who lack conviction in their strategies. They’re basically “me too” investors. So, when any sort of bad news or headwind comes their way, they sell.
Investors who fully understand why they’re investing … who see the big picture … who can distinguish between a short-term speedbump versus a real, significant problem … these investors either ignore temporary stock-price weakness, or use it as an opportunity to increase their position size. They have strong hands.
This distinction really boils down to the core questions each investor must ask before putting money into a position …
Why am I doing this? What is the case for gains to come? What would cause me to abandon my case and sell?
If you know these answers and believe in them, you likely have strong hands.
***The outlook for altcoins remains highly bullish
Let’s jump straight to Matt:
As bullish as both the action and the outlook are for bitcoin right now, smaller altcoins are setting up for an even bigger rally.
“Altseason,” as I call it, is when the smaller cryptos outperform bitcoin. We’ve seen it before after bitcoin’s halvenings, and the expectation is even bigger this time around with the growing acceptance of cryptocurrencies.
I believe bitcoin is poised for a rally to $50,000 in the next few months, suggesting a gain of approximately 56% from current prices. If that happens, altcoins should have even more impressive rallies … perhaps well into the triple digits.
Now, despite the potential for major rallies from altcoins, it’s critical that investors understand what’s coming and prepare for it …
We just talked about weak hands versus strong hands.
Let me show you why strong hands are critical when investing in altcoins.
To illustrate, we’ll use one of the positions that Matt has permitted me to share with our broader Digest readership, Chainlink (Matt’s subscribers are up over 1,000% so far).
Back to Matt:
Assets don’t go up in a straight line. So, if you know the longer-term trend is up, those dips that sometimes look like crashes are in fact bargain opportunities.
Just look at our biggest winner over the past 12 months — Chainlink (LINK).
You’ll see not one but two 50%+ pullbacks (circled). Even with those big pullbacks, Chainlink has still gained more than 10X for us in a little over one year.
I wouldn’t buy dips if I wasn’t convinced of the long-term potential, and you know how I feel about cryptocurrencies.
So, if you’re newer to crypto investing or just think the altcoin ship has sailed, you can relax.
If — or more likely when — cryptocurrencies pull back again in the coming weeks and months, the strong fundamentals that drove the last massive rally will fuel the next one.
***Matt urges investors to envision the future
Making the biggest returns in investing requires seeing what’s coming before the masses. Having your money invested before the crowd inflates a price can be the difference between respectable gains and life-changing returns.
The challenge is it can be incredibly hard to see what’s coming. Unfortunately, if you can’t, you risk suffering an extraordinary opportunity cost.
Here’s Matt, writing to his subscribers:
Those who ignore cryptocurrencies and the blockchain run a similar risk to those who ignored the advent of the internet.
It’s a shame, and I’m glad it’s not you. You’re right there at the forefront of the next big technological revolution moving into the mainstream in the Roaring 2020s.
If you’re having trouble envisioning the future of cryptos and blockchain, I hope you’ll put some weight on what Matt is seeing coming our way:
The ingredients couldn’t be coming together any better to support our long-term expectations and drive altcoins higher.
Historical patterns are playing out true to form. Big money is noticing cryptocurrencies. Hedge investments are increasingly popular with all the money governments are printing.
Demand for altcoins outpaces supply in many cases. And more industries are adopting blockchain technology.
All of this is why we could match or even exceed our big gains from this past year.
Bottom line — crypto is not a fad. Top-tier altcoins and bitcoin are solving real world problems. They’re not just gambles based on the greater fool theory.
If you’re skeptical, that’s completely understandable — but don’t remain skeptical. Become an investigator. Find out whether your skepticism is warranted …or perhaps, unfounded.
Discover whether this asset class deserves weak hands or strong hands — and why.
I can take a guess at what Matt’s subscribers who are up hundreds of percent would advise you to do.
Have a good evening,