Is $30k Bitcoin Possible?
Markets in turmoil, Bitcoin vs gold, Bitcoin vs the news, and Kiyosaki's take.
"It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for." —Robert Kiyosaki
Bitcoin drops 50% off all time highs.
Short-term bears are making themselves known. Bitcoin and the rest of the crypto markets continue a heavy selloff. BTC was down roughly 50% from its all time high this week. $35,000-38,000 support failed and Bitcoin fell as low as $31,500 on Tuesday. $30,000, however, appears to have held for the time being. We haven’t quite tested that level yet. On Wednesday, Bitcoin rallied from lows, moving up toward $35,000. The coming days will determine whether or not we see consolidation at current levels before another break above $38,000 or a further drop to $30,000.
With the recent volatility, $19,000 is being thrown around as the true floor. $19,000 more or less equates to the previous all time high if we look back past the current market cycle. When Bitcoin broke $20,000 in December 2020 and continued on as if it was nothing, everyone was amazed. There was fear that the price point, first touched during the 2017 bull run, would provide more resistance. Bitcoin took it with conviction. Now, however, it’s being touted as the last line of defense on the way down. To be clear, we’re far from $19,000 but it’s funny how much sentiment changes in six months. It’s important to zoom out and put things into perspective.
Market turmoil is being driven largely by mixed signals from the media, governments, and investors alike. Short-term retail traders are once again leading the charge in the selloff. Long-term holders, however, are accumulating as much Bitcoin as they can. Such activity has historically meant either that the worst is behind us or we’re entering a bear market. Nothing is certain in today’s climate.
While we’ve attempted to compare this bull market to both 2013 and 2017, 2020-2021 is entirely unique. It started with the institutional interest. Now, Bitcoin has entered the mainstream in all types of conversations and industries. We even have the President of El Salvador calling for Bitcoin to become legal tender. It’s a steady stream of Bitcoin news nowadays—good, bad, and everything in between.
Newcomers and short-term traders don’t know what to make of the current market climate. I’m not a trader. I haven’t sold any Bitcoin during these drawdowns. If anything, I’ve converted some of my altcoin positions to BTC at opportune times and would consider buying more BTC if we do test $30,000. I also added to my Coinbase (COIN) position this week while it dropped alongside crypto markets. I remain cautiously bullish in the short-term and am taking advantage of any opportunity I can to add to my long-term positions.
Long-term holder accumulation could signal a bear market, but it could also signal the start of yet another run-up. For paid subscribers, I spoke last week about two scenarios—the first being that the bull market is over. The second is that we’re only halfway. Check out that email for more insight but we’re looking for June to clear up which direction we’re heading. If the bear market is beginning, whales and true believers are doubling down. It’s too early to tell but I’m looking for a specific monthly close before turning bearish.
Bitcoin vs Gold
As Bitcoin drops, gold rises.
Gold is seeing a steady recovery as Bitcoin declines. In the case of gold, investors might see it as a “more stable” version of Bitcoin. While this is somewhat true, it misses the point of a digital store of value or a “gold 2.0.” Trading activity shows that some institutional Bitcoin investors locked in profits and moved money from BTC to gold in May—right at the start of pullbacks from Bitcoin’s all time high.
My two cents is the move to gold is standard profit taking and nothing else. Gold is a better alternative to the dollar for large institutional investors looking for yield. For all its faults, gold still appreciates. I’m personally on the sidelines when it come to gold. I sold my holdings in the iShares Gold Trust last year. For context, gold plummeted from highs seen around August 2020 but is making its way back up.
I’m watching the relationship between Bitcoin and gold closely as I may reallocate a small portion of my portfolio to include gold if current trends continues. To be clear—it would be a short-term hedge and nothing more. My actual Bitcoin and crypto holdings, combined with crypto exposure via Coinbase, would dwarf any gold position I hold from here on out. Bitcoin is gold 2.0. Gold does, however, remain a reliable store of value versus simply holding cash.
Bitcoin vs News
“Following the money remains one of the most basic, yet powerful tools we have.”—Deputy Attorney General Lisa O. Monaco
Bitcoin and cryptocurrency have been in the news… a lot… It all started with Elon Musk. Then, we moved onto… more Musk. Now, we’ve waded into China banning Bitcoin territory (which isn’t the case) and the more recent addition of Bitcoin and ransomware. The Justice Department ‘followed the money’ when it came to the Colonial Pipeline attack. If anything, this is confirmation that Bitcoin works. They seized 63.7 BTC, valued at approximately $2.3 million from the group known as DarkSide. The news is being cited as yet another reason for market volatility.
The Justice Department’s seizure, like many recent news items surrounding Bitcoin, is another misunderstood and quickly reported on piece of information with little context. If we zoom out, we again see that long-term Bitcoin holders remain unfazed by any of these news items. Newcomers and retail traders, however, are quicker to react, seeing the Bitcoin seizure as unsettling—"is Bitcoin illicit criminal money? How can the government seize it?” Etc. Etc. Read the Justice Dept.’s statement here.
The statement is vague and hints at the FBI acquiring the private key to a Bitcoin address. They do acknowledge what Bitcoiners already know—if you know where to look, you can track any and all transactions on the blockchain. They say that “by reviewing the Bitcoin public ledger, law enforcement was able to track multiple transfers of bitcoin and identify that approximately 63.7 bitcoins, representing the proceeds of the victim’s ransom payment, had been transferred to a specific address.” In my mind, this is a win for Bitcoin. It performed as advertised.
Bitcoin and the War of Perception
US Treasury Secretary Janet Yellen continues to beat the drum of Bitcoin being used for illicit activity. The Colonial Pipeline attack and subsequent recovery by the Justice Department doesn’t do anything to help newcomers learn about Bitcoin or counter Yellen’s commentary. On-chain data suggests that the vast majority of Bitcoin transactions do not represent illicit activity. SEC Chairman Gary Gensler has been a more sensible voice when it comes to crypto, calling for regulations that will protect individual crypto investors against manipulations. Gensler, as everyone loves to mention, taught classes on Bitcoin and Blockchain at MIT.
Bitcoin has a lot on its plate and it relies on informed holders to defend it. There is no central entity or CEO to stand up for Bitcoin. There are plenty of centralized organizations and groups behind some of the biggest altcoins in the world but even those are suffering from the recent market downturn—as Bitcoin moves, so does the market. If history is any indicator, it’s that Bitcoin is persistent. We’ve already moved on from Musk and Tesla loving Bitcoin, to diminishing it for environmental concerns, to Anonymous releasing a video calling out the hypocrisy behind Musk’s recent commentary. All of that feels like ages ago and it’s only been days.
In that same time, we had Michael Saylor brokering a meeting between top Bitcoin miners and Musk. Saylor and MicroStrategy bought the dip again, announcing the sale of $500 million worth of notes to buy more BTC. Bitcoin Miami 2021 happened. Jack Dorsey lauded Bitcoin and said that if he wasn’t working on Square and Twitter, he’d be doing everything he could to further the cause. He even announced that Square is working on a Bitcoin wallet product. I mentioned the news from El Salvador earlier. There’s been plenty of “bullish” news in the crypto world, but the mainstreaming effect brings a nonstop flurry of activity from all sides.
Rich Dad, Poor Dad
You saw the quote to start the email…
Robert Kiyosaki is the author of the bestselling Rich Dad, Poor Dad series. He’s also an outspoken Bitcoin investor and has called for the world’s largest cryptocurrency to top $1 million within five years… a bold prediction. Kiyosaki is not alone in these million dollar Bitcoin price calls. He also owns Ethereum. What’s important here is not just his stance on crypto but his mentality when it comes to money in general. Similar to Michael Saylor, Kiyosaki talks about making money work for you, your children, their children, the institutions you want to fund, and so on—as the quote above says “how many generations you keep it for.”
Bitcoin is an asset. Kiyosaki is a proponent of holding assets that generate cashflow. In the case of Bitcoin, it appreciates over time. There are also ways to earn extra yield on it (if you custody via a third party like BlockFi). Interesting to note, Kiyosaki holds both gold and silver. He sees Bitcoin as untested compared to those but he is a big fan of it, especially in today’s climate of endless money printing.
I mentioned Stanley Druckenmiller recently. Like Druckenmiller, Kiyosaki is troubled by the way central bankers are so quick to print “bad money.” You’ll spend bad money all you want but good money… well at least in the case of Bitcoin, Kiyosaki says he’ll never spend it. If anything, he says he’ll buy more.
Kiyosaki talks about knowing what you are—an investor, a trader, or a speculator. And generally speaking, you don’t want to be a speculator. He says Dogecoin buyers are speculators. To Kiyosaki, speculators are just gamblers. He’s an investor and Bitcoin is an investment. Traders, unlike investors, are flippers looking to make a quick buck. He doesn’t say which is right or wrong but it isn’t too difficult to read between the lines. Keep your money as best you can and make it work for you.
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Next week, I’ll do a deep-dive for paid subscribers on how to use Bitcoin wallets. If you’re unsure about where you should be holding your crypto or don’t know if it’s secure, you should read this. Here’s a look at what I’ll cover.
What are Bitcoin wallets?
Setting up a hot wallet
Setting up a hardware wallet
What’s the difference?
Reseting wallets from scratch
How to use wallets securely
Become a paid subscriber so you don’t miss out on the in-depth look. On top of that, I’ll be watching how Bitcoin reacts to current price levels and provide more in-depth analysis on the rest of the crypto market. You should be watching for a specific price target this month—I am. And I’ll keep you updated on how we’re tracking.