Here’s What the Crypto Cynics Are Missing

I tweeted it this morning, and it turned out exactly as I expected.

A concept image showing Bitcoin (BTC) in a bubble.
Source: Shutterstock

Here’s what I said…

Get ready for the “I told you so” today from the people that have told you #bitcoin was a scam since it was under $1,000.

Don’t get me wrong — this is UGLY and it HURTS.

But, remember #Bitcoin was under $10,000 one year ago.

One word for new and old investors: PERSPECTIVE

Couldn’t have said it better myself. Oh wait…

All kidding aside, it’s 100% true.

Here’s what you need to know about the selloff in cryptocurrencies and what it means for the future…

First, the long-term thesis has not changed. Just the prices.

You know what else hasn’t changed? The power of Bitcoin (CCC:BTC-USD), altcoins and blockchain technology to improve processes and move the world into the next age of software and transactions.

Same hypergrowth theme. Same hypergrowth potential. Lower prices.

Add those together and you get one inescapable conclusion … buying opportunity!

Could prices go even lower? Of course. We can’t say with much confidence where the exact low will be this time around, but we can say with high confidence that prices will very likely be much higher over time.

I know that these sharp corrections are painful and even frightening. I’ve gotten questions today from people wondering if they should sell their crypto investments or if they should invest in cryptos at all.

No, you shouldn’t sell.

And yes, you should invest in cryptos because the long-term potential remains big.

Several factors have converged to spark the selloff … but despite noise from the media and skeptics, they don’t spell disaster for the industry.

Hotter-than-expected inflation earlier this month hit both stocks and cryptos. Colonial Pipeline paid $5 million in ransom after a cyberattack — in Bitcoin. That didn’t help its reputation. China’s government made some negative comments on Bitcoin. And technical levels were breached that no doubt added to the selling.

Perhaps the biggest reason is Tesla (NASDAQ:TSLA) and its controversial chairman, Elon Musk. On Feb. 8, Tesla said that it purchased $1.5 billion worth of Bitcoin and would soon start accepting the cryptocurrency as payment.

But in its April earnings call, the company announced it had sold $200 million worth of Bitcoin to “prove liquidity.” And one week ago today, on May 12, Elon Musk tweeted that Tesla had “suspended vehicle purchases using bitcoin.” He cited the amount of energy and fossil fuels used to mine Bitcoin as a concern.

Tesla makes about $500 million selling carbon credits. Maybe those credits were in jeopardy should the company accept bitcoin as payment? We can’t know for sure. Still, there are many altcoins that are much more energy friendly, and he did say they were looking at other cryptocurrencies.

Even though the long-term outlook is unchanged, I know the volatility in Bitcoin and cryptos scares a lot of people. But here’s the thing…

History shows you don’t have to put very much of your portfolio into cryptos to make a huge difference. Just a small allocation has the potential to be a game changer.

Even 5% of your nest egg in Bitcoin could have doubled your entire portfolio over the last five years. And a similar amount in my favorite altcoins could be absolutely lifechanging.

If that sounds hard to believe, I’ve put together some numbers to show you exactly what I’m talking about.

If you had done as well as the average investor in the S&P 500 over the five years from 2016 to 2020, a $100,000 portfolio would have grown to $184,000.

But … if you had put just 10% of your portfolio into Bitcoin at the start of 2016 and left the other 90% in stocks, you’d be sitting on over $839,000.

That’s four times better than an all-stock portfolio!

And if 10% still feels too risky, take it down to 5%. A 95% stock and 5% Bitcoin portfolio over the last five years would have netted you over half a million dollars.

That’s more than double the return of your all-stock portfolio, with just a 5% allocation to Bitcoin.

Or take it to an extreme level of just $1,000 of your $100,000 portfolio in Bitcoin and the other $99,000 in stocks. You would still have made an extra $65,493 versus an all-stock portfolio.

Everyone needs to figure out what amount of Bitcoin and altcoins is right for them. But not owning any means you could get left behind.

And right now is a great time to buy.

I have said all along that I fully expect Bitcoin to hit $100,000. And I have said it may drop a lot before it gets there.

That’s the nature of hypergrowth trends, stocks and cryptocurrencies. But as long as their potential to transform much of our world remains on track, I expect to see more big gains in the next five years.

Regular readers know I am a Bitcoin bull. That hasn’t changed one bit. And I expect even bigger gains from lesser-known altcoins that haven’t gotten 1/100th the attention Bitcoin has.

On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now.


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