Down the Rabbit Hole, We Go

Good morning everyone, I hope all’s well.

I just got done teaching the kids today, and I checked my crypto wallet.

I’m up over 50%. It’s a fantastic feeling.

Crypto Bulls Run Again

I know people who have been long stocks like Apple, Microsoft, Facebook, and Google have all had that experience many times.  Yet, it still amazes me how much crypto continues to rally in the face of inevitable opposition.

Bitcoin has rallied past $45,000 again, and Ethereum is over $3,000.

But what makes me believe in this whole crypto thing are the banks.

As you know, I teach young bankers.  All the big banks want crypto, blockchain, and smart contracts in their teaching curriculum, especially for operations and tech staff.

It’s not that amazing how banks are afraid of crypto.

They are terrified that the nature of banking itself will change in its entirety if Bitcoin gains worldwide adoption.

It would not be surprising to see the entire sector fold in on itself if that were the case, because quite frankly, you just wouldn’t need traditional banks anymore.

Let’s take super entrepreneur Sara Blakely’s advice:

 

I can’t help you with the “in shape” one.  (In fact, I need your help with that!)

The creative one may be writing, painting, model airplanes… anything.

But I suggest you make the “money” hobby learning everything you can and then investing in cryptocurrencies.

I’m not going to get into all the theories about crypto and blockchain.  I’m not sure it helps.  There are also more experienced resources on the internet.

I like BitBoy Crypto’s YouTube channel to get started.  There are also numerous resources on Udemy if you want a class, and they only cost around $11. 

I’ve covered some of the basics in earlier Rudes.

Old Dog, New Tricks?

I would like to address the fact that someone like me, who is 46 years old, has to admit that he has been wrong for the past ten years.

I thought gold would win out, and Bitcoin was a scam.  I was wrong, despite what Nassim Taleb and Peter Schiff said.

Many of you probably feel the same way.  You didn’t buy Bitcoin when it was $12.  So you think you’ve missed out on the whole crypto thing.

Now that would be a mistake.

Even if you’re in your mid-50s, I want you to be patient with yourself.  But at the same time, I want you to have enough guts to take a look at something completely new if you haven’t done so already.

I genuinely believe you must get your head around crypto and blockchains over the next year.

One of the things that have shocked me, even though inflation is raging on – the July CPI rose 5.4% year on year – gold got hammered.  Here’s the chart:

It’s been a bloodbath. I believe that the gold futures market is damaged.

Not because of the government intervention, but I suspect that the money that would have sent gold to $5,000/oz is now in Bitcoin. Crypto’s market capitalization is about $1.9 trillion.

I genuinely believe the big players have decided that gold is just a silly hedge against inflation, and they’d much rather have Bitcoin.

Real Vision Finance with Raoul Pal posted a fantastic video you should watch. It’s about why Bitcoin is the only asset class you should be interested in right now.

Raoul Pal is a former Goldman Sachs and GLG Partners trader.  He’s no youngster.

A small disclaimer, I have a position in Ethereum, not Bitcoin.

I’m in Ethereum because it’s cheaper than Bitcoin, and I think it has a lot more room to run as a percentage of returns. I also like the smart contract part of Ethereum, which is what the banks are interested in.

Because if they can create Ethereum blockchains, then they may retain a portion of their business.  So a lot of money and effort is going into building them.

And money is even going to trainers like me to show them why this is necessary.

So you, as an older person who needs to make their money work for them, there’s no doubt you can still make money in the stock market.

If my colleague Jim Rickards is correct, there will be massive inflation from the mid to the late 2020s.

If you get in the stock market, the stock market will probably blow up another big bubble by then.  But I think you can make a safer and better return in the crypto market.

There are plenty of other altcoins out there that are worth your time. Matic and Cardano are both worth a look.

But just get your head around Bitcoin first, and then you’ll understand why it’s so attractive.

The Bitcoin Standard by Saifedean Ammous is one of the best books you could read concerning crypto. I highly suggest this book for your weekend reading.

I’m trying to give you a nudge. The nudge is this: you can still, even at an advanced age, pivot enough to save your family’s fortunes if you look at this asset class.

I’m not recommending that you run out and buy anything right now, although even some wealth managers recommend a 5% allocation to crypto.

That includes the big box financial advisors.

But what I am recommending is that you at least start to understand what crypto is.

Bitcoin is essentially digital gold that you don’t have to store in a physical location or pay insurance on, and your cost of carry is zero.

That’s very attractive. If you think of Bitcoin as digital gold and maybe Ethereum as digital silver, it’ll start to make the transition from fiat to crypto a lot easier.

The other thing is you don’t have to mess around with all sorts of options, strategies, and derivatives to increase your returns with crypto.

The returns are already there.

They’re already outsized.  Even from its drop from 60 grand, Bitcoin has already proven itself as an excellent inflation hedge.

It’s the only thing that has worked as a hedge against inflation.  Gold certainly hasn’t.

So today’s Rude is just encouraging you to get out there, to read The Bitcoin Standard, to get your head around blockchain, and to start understanding the technology.

I’m going to start doing more of that study in myself, and we could call ourselves the Crypto-Come-Lately.

Those in our 40s, 50s, 60s, and  70s are old dogs learning new tricks.

There’s nothing to be ashamed of, far from it.

It’s something to be proud of, and quite frankly, going down this rabbit hole might constitute an entirely new hobby for a lot of us who have some time on our hands.

With that, I leave you with happiness.

Have a great day.

All the best,

Sean

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