Why Bitcoin Now, and an Easy way to Own

Posted on October 18, 2020 by Tom
  • Three possible outcomes to the USA debt problem
  • Could Bitcoin go to $1 million per coin?
  • Easy way to own Bitcoin

Three possible outcomes to the USA debt problem
We break the possible outcomes into, Two Extremes and the Middle:
I: The Federal Reserve leaves interest rates low for an extended period of time and weakens the US$ so that over the next ten years we pay back the USA debt with cheaper US Dollars. Estimated weakening is 3% to 5% a year for ten years. This results in a 30% to 50% loss of purchasing power over the next ten years. In this process, we lose purchasing power of our cash savings, bonds or interest-based investments. Hard asset investing is needed to retain purchasing power. Therefore, the positioning of Gold (precious metals) Commodities and hard asset investing. It is important to not have debt attached to these hard assets as your income needed to support the debt may disappear. It is also likely that in people’s need for liquidity, hard assets might need to be sold and we could have spikes lower in the value of hard assets.
II: The system crashes as discussed in the Video linked below by Raoul Pal. Pal is suggesting that money will run to a non-conventual safe havens like Bitcoin and precious metals. During an all-out crash, all values will drop including hard assets. Bitcoin has a limited amount of coins that can be created (21 million coins) so the limiting feature will prevent dilution as fund flows from cash, bonds and equities rotate into Bitcoin and precious metals.
III: Most of the time we muddle through and we have a bit of both of the above but in different sectors of the economy and in different countries at different times. We hope that is the case again. We just muddle through. That is ok unless it gets personal to you. This is always a potential. The Federal Reserve is trying to implement a stabilization of debt reduction through actions in number I: above. It is our duty as citizens, to recognize what the government is doing and take the necessary action to protect and benefit from this recognition.

Could Bitcoin go to $1 million per coin?
Raoul Pal has become visible in the media when in June of 2020 he suggested that Bitcoin could go as high as $1 million per coin within five years. Pal is not the first to say this, but he does have credibility that lends weight to the statement. The case for this price increase come from the following factors

  • First: Bitcoin has a limited number of coins that can be issued. This is dissimilar to world governments with unlimited printing of fiat currency. This makes Bitcoin similar to precious metals which are difficult find, mine and refine, therefore placing a self-limiting, but not a closed number of ounces or grams available
  • Second: The ease of which bitcoins can be decentralized from government confiscation or restrictions.
  • Third: Acceptance of Bitcoin as a recognized asset by governments and investors. We have reached this point in time, but this fact has not become mainstream yet.
  • Fourth: Investment managers need to protect and perform.  This will drive institutional money into Bitcoin (and likely precious metals) as other asset classes fall under the weight of liquidations in cash, bonds and equities.

Raoul Pal: Bitcoin To 1 Million | Global Markets Insolvent
June 2020
Raoul Pal is no one’s fool. Pal retired young; I think 36. His YouTube Vid above is not comforting. He believes the big bad depression in close to happening. Three months to sometime in 2021. His thinking is not the same as what I have said and frankly many people have said, Printing money will weaken the USD and cause Inflation. Gold & Silver will rally. Pal thinks no easy solution. That will not happen but he is still diversified. I will let you follow the link in the title to hear his theory on why & what will happen. He says the greatest insolvency event in History is possible – and soon.

Pal’s macro report stresses that the “Baby Boomer” generation is screwed.
He expects this generation to sell away their nest eggs.

  • His portfolio, when this was filmed in June was 25% Gold; 25% Bitcoin; 25% cash; and 25% available for trading opportunities. I do not know what his net worth is. Internet search say about $15 million
  • Sept 22, 2020 – an update   Raoul Pal on Why He’s Irresponsibly Long Bitcoin  
  • Jan 31 2020 on twitter – Raoul Pal: If I could only own one asset for the next 10 years, it would be bitcoin $BTC It encapsulates all of my larger macro views and feels like the point on the far horizon we are headed to, in some shape or form. Yes, I like gold too and many other things but BTC risk/reward beats all.

Raoul’s perspective is Bitcoin could go from $12,000 per coin today to $1 million in 2025 and it would be a slowing in the appreciation rate, Bitcoin had from 2010 to 2020.

Easy way to own Bitcoin
Much the same way ETF’s have changed investing in equities, Trusts and ETF’s for cryptocurrencies will change, ease and increase acceptance of Bitcoin specifically, but for all digital currencies. Highlighted below, are headline links to top stories “last week”, that illustrate the acceptance of a Bitcoin trust and supporting evidence that there is a scarcity factor in owning Bitcoin to drive its value higher.

GBTC is like a closed end fund, so GBTC can trade at a premium or discount to the actual Bitcoin price and is linked here. Currently the premium is 14.53% as of Friday, October 16, 2020.

From a supply and demand perspective it appears that Bitcoin in some form has entered a respectability stage – an acceptance stage. Institutional Investors are now accumulating positions. These are assets that are being positioned longer-term so as coins are bought and held, the scarce factor comes into greater play. For this supply and demand reason we will begin accumulating Cryptocurrencies and Crypto related investments.

We have mentioned, owned and trade micro-cap companies involved in Blockchain / Crypto:

  • Mechanical Technology (MKTY)* $2.07
  • RIOT Blockchain Inc (RIOT)* $3.11
  • MARA Patents (MARA) $2.18   

Grayscale has three crypto coin trusts one could own – listed below

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If you want a listing of 22, large cap and small cap companies with strong exposure to Blockchain and Crypto currencies, send a request with, Blockchain and Crypto Ideas, to Money@Livingoffthemaket.com. We will not spam you or sell or share your info.

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