Investing in Cryptos: A Proven Hedge That Can Also Make You Money

How’d you like to make a solid return of 701% while the broad market loses 2%?

stimulus checks
Source: Shutterstock

It’s a rhetorical question. Of course you would!

That’s exactly what one of my recommendations has done since it was added to our portfolio in early January.

And if you think you’re too late to the party, think again. We’re nowhere near the end of such explosive profits …

Through the first half of the year, and particularly in the last month, it has become crystal clear that bitcoin and altcoins (alternatives to bitcoin) are moving into “takeoff” phase.

Bitcoin hit its 52-week high above $12,000 on August 2. Since the March 13 low, it has jumped 188%. Compare that to the S&P 500’s roughly 24% gain over the same timeframe.

That’s great. But select altcoins have done much, much better.

I mentioned one above, and there are even more. In fact, the average return for the 11 altcoins in my Ultimate Crypto portfolio is currently about 170%. The portfolio has nearly tripled in a little over seven months since it was launched on January 7.

During the same timeframe, gold is up only 24% and the S&P 500 is showing a measly 4% gain.

Get ready for more.

As demand for cryptocurrencies grows, we’re seeing a lot more mainstream adoption. PayPal (NASDAQ:PYPL) and its Venmo division plan to allow users to buy and sell cryptos directly from both websites. Their competitor, Square’s (NYSE:SQ) Cash App, is now getting much of its revenue from bitcoin trading.

The “big money” is noticing, and institutional-level investors are also jumping aboard.

Famous hedge fund billionaire Paul Tudor Jones announced in May that he was investing nearly 2% of his assets (about $106 million at the time) in bitcoin.

And while altcoins definitely fit with my hypergrowth investing philosophy, they also provide currency hedging and diversification that is increasingly important. When Jones made his investment in bitcoin, he said we could be witnessing the “birthing of a store of value.” He further argued against parking money in U.S. dollars or traditional currencies because modern governments tend to debase their value by spending more than they bring in.

I couldn’t agree more. So does Michael Saylor, CEO of business analytics software company MicroStrategy (NASDAQ:MSTR). Just this week, Saylor announced his company would allocate all $250 million of its funds that are currently set aside to hedge against inflation into bitcoin.

“This investment reflects our belief that bitcoin, as the world’s most widely adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash,” Saylor said.

Governments debasing currencies is nothing new. Every new dollar that is printed devalues existing dollars. Same with all currencies. It’s called “inflating” the money supply.

Please don’t overlook the importance of this. Inflation is one of the greatest dangers facing those of us saving for retirement. It can massively impair the future buying power of the money you save today.

And we’re seeing this more than usual right now as governments around the world respond to the pandemic’s economic impacts with historic stimulus. It may be needed, but it’s also unprecedented.

The U.S. government has spent an incredible $3 trillion in economic relief related to COVID-19. It’s gone to small businesses and individuals, and it’s expanded unemployment insurance.

Congress members are currently debating whether to add as much as another $1 trillion for a second round of stimulus. And it won’t stop there.

The stimulus has been great for the stock market … but not so much for the U.S. dollar. Last Thursday, the dollar hit a two-year low of 92.495 against a basket of currencies.

This impacts all of us. The purchasing power of the consumer dollar in the U.S., as tracked by the Bureau of Labor Statistics, hit an all-time low of 38.6 in July.

As government spending continues to grow and the threat of inflation climbs along with it, so does the allure of today’s cryptocurrencies. Simply put, digital currencies — like bitcoin and other select altcoins — cannot be debased through inflation.

It’s impossible. The software code won’t allow it.

Only 21 million bitcoins will ever be created. Period. The limit is hardwired into bitcoin’s protocol, so debasement is literally impossible.

More than 18 million coins have already been mined, which triggered an event in May that’s baked into bitcoin’s code. For the third time in its history, rewards for newly mined coins were cut in half. It’s called the “halvening,” or “halving,” and the first two times were major catalysts to higher prices.

When a halvening occurs, the supply of new bitcoins coming on the market drops by half.

It’s the exact opposite of debasement. It’s a “supply shock”… and it means all current bitcoins are now more valuable.

After the first halvening in 2012, bitcoin shot up 2,135%.

Following the second halvening in 2016, bitcoin rose 3,122%!

I’m equally bullish on bitcoin after the third halvening, and the breakout we’ve seen these last two months could well be the start of a huge move higher.

But … I’m even more excited about the potential of select altcoins. They surged more than bitcoin after the first two halvenings.

Similar action is playing out right now.

I told you about one earlier. And as I also mentioned, our Ultimate Crypto portfolio has absolutely crushed the market this year.

As big as the gains have been so far, I expect much more to come. You don’t want to miss out on crypto’s powerful surge.

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.


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