A Single Bitcoin – Long-Term Investment Strategy
This in from Zero Hedge, Jim Paulsen, the Chief Investment Officer of Wells Capital Management, has changed his hardcore bullish stance on the stock market to admitting in a Wells Capital letter to clients that the market is as overvalued it has ever been.
The reason Paulsen could remain bullish this long in the face of such overvalued stock prices, and why even now he is not issuing a sell signal, is that these prices are being artificially inflated via the Fed’s printing presses. It is no mystery to those on the inside of the Wall Street machine what is going on, but they are genetically incapable of pulling back when there is the chance of getting a higher paper net worth.
There are two things to understand from pronouncements like these coming from Wall Street luminaries: The first is that a correction will inevitably happen wiping out all the gains investors are now touting – and what’s more, the coming correction is likely to be broader and deeper than anything we’ve ever seen before. The other is that until that correction happens, there will be many innocent small-time investors sucked in by articles proclaiming ‘the trend is your friend,’ putting their futures on the line.
Bitcoin was released at a time of international financial crisis and has been building infrastructure and use cases ever since. It is in the next financial crisis that Bitcoin is going really shine. In the spring of 2013, the small country of Cyprus found as it suffered a knock-on recession from the Great Recession, that its banks were failing.
To prevent a public bail-out of the banks as was done in the US, the banks were saved by bail-ins. Rather than getting funds from tax payers, these banks gave all of their depositors a haircut on their deposits. Cypriots went to bed thinking that had one sum in their savings account and awoke he next morning to discover that any amount over a government limit had simply been ‘disappeared.’
Theoretically, this should not have happened this way. In a bail-in, depositors should be the last ones to see their money endangered – rather it’s those who have derivative bets, principle investors, and governments who should suffer first. In reality this order was reversed so that the cronies were protected and it was the likes of you and me who footed the bill.
Many have speculated that the bail-ins in Cyprus were merely a test run to see if that system would work. It did. There were no protests in the streets and the government did not topple. There are now bail-in laws are passing or being considered in many countries around the world. So, when the next stock market correction happens, and when the banks backing the market begin to fall, our hard-earned assets will not be safe.
The crisis in Cyprus gave Bitcoin a big price spike as those in the know tried to use it to protect their assets, and it also gave Bitcoin its first real mainstream press exposure. When the next world-wide crisis happens, Bitcoin will again be a way to save assets and its value is set to rise exponentially.
Many suggest that Bitcoin could go to many thousands of dollars or to zero. As time progresses, the chances that it will go to zero look increasingly remote. Smart advisors always say “don’t invest more than you can afford to lose.” I would say – don’t even go that much. An investment of 276 dollars today (the current price of a single Bitcoin) could make all the difference in the world to your future.