Reports of bitcoin’s demise greatly exaggerated

Wednesday, 3 January 2018
Melbourne, Australia
By Bernd Struben

  • An US$18 billion nudge
  • Nine winners…no losers
  • When did you first hear of blockchain?
  • Tasmania to the front

The reports of my death have been greatly exaggerated.’

Samuel Clemens (aka Mark Twain)

When US writer, Mark Twain got sick on an overseas trip to England in 1897, rumours circulated that he was gravely ill.

Those rumours grew until news reached the US that Twain had passed away. This news came as some surprise to the man himself…who lived on for another 13 years.

A century on and rumours of bitcoin’s demise have been reported almost gleefully in the mainstream media. Yet these are equally exaggerated.

Sure, the world’s most popular cryptocurrency has taken a tumble. At time of writing one bitcoin is trading for US$14,841.54. That’s down about 25% from its 18 December high.

But a 25% retracement is nothing new for bitcoin.

In fact, our own crypto experts, Sam Volkering and Ryan Dinse, cautioned their readers about such a likely fall last year in their advisory service, Secret Crypto Network. Yet they weren’t concerned about it.

Why?

Because moves like this tend to shake out the ‘weak hands’. And eventually it sees buyers return to drive the price back up.

We’re already beginning to see this. Bitcoin hit a low of US$12,629 on 30 December, according to CoinDesk. That means it’s up 17.5% in the last five days.

More, after the markets…

Markets

US and European markets were open for the first time in 2018. And in the US it was up and away while European markets largely lost ground.

Overnight, the Dow Jones Industrial Average closed up 104.79 points, or 0.42%.

The S&P 500 gained 22.20 points, or 0.83%.

In Europe, the Euro Stoxx 50 index finished down 13.77 points, or 0.39%. Meanwhile, the FTSE 100 lost 0.52%, and Germany’s DAX fell 46.25 points, or 0.36%.

In Asian markets, Japan’s Nikkei 225 remains closed for the holidays. China’s CSI 300 is up 1.24%.

In Australia, the S&P/ASX 200 is up 7.32 points, or 0.12%.

On the commodities markets, West Texas Intermediate crude oil is US$60.43 per barrel. Brent crude is US$66.57 per barrel.

Gold is trading for US$1,320.71 (AU$1,686.09) per troy ounce. Silver is US$17.21 (AU$21.97) per troy ounce.

One bitcoin is worth US$14,841.54.

The Aussie dollar is worth 78.33 US cents.

An US$18 billion nudge

Part of bitcoin’s rebound is being attributed to the revelation that PayPal founder Peter Thiel’s Founder Fund has heavily invested in the crypto.

From The Australian:

One of the biggest names in Silicon Valley is placing a moonshot bet on bitcoin.

Founders Fund, the venture-capital firm co-founded by Peter Thiel, has amassed hundreds of millions of dollars of the volatile cryptocurrency, people familiar with the matter said…

Founders bought around $US15 to $US20 million in bitcoin, and it has told investors the firm’s haul is now worth hundreds of millions of dollars after the digital currency’s ripping rise in the past year.’

As you can see in the graph below, bitcoin jumped more than 8% on the news. The move added roughly US$18 billion to its market cap.



chart image

Source: Bloomberg
Click to enlarge


In other good news for bitcoin, a bitcoin investment company — XBT Investments — is set to list on the ASX this quarter.

The company won’t invest in actual (virtual) bitcoins. Instead, it will invest in bitcoin futures. This will help protect the company and investors from the very real threat of hacking. And it handily skirts the ASX’s rules prohibiting cryptocurrency investment companies.

The company brushed off concerns about bitcoin’s price swings.

XBT managing director Jason Davis told The Australian Financial Review:

‘[H]e was not concerned about the recent volatility affecting investor sentiment in the lead up to the initial public offering.

“It’s entirely usual. It’s fallen 90 per cent several times and then recovered to jump thousands of per cent,” he said.

“The only difference now is that people know about it. Looking at the history of bitcoin the volatility has been falling through time, as are the returns, believe it or not.”

Nine winners…no losers

In their investment service, Secret Crypto Network, Sam Volkering and Ryan Dinse have a similar take on volatility. And they’re upfront about the fact that if you can’t stomach a 25% — or more — fall, you shouldn’t be investing in cryptos.

They’re also very confident that any such falls are almost always followed by much larger price rises.

And so far, their track record backs them 100%.

The chart below is a screen shot from the weekly update of Secret Crypto Network that went out this morning. It shows you the returns made by the nine different cryptos they’ve recommended to their readers.

(Details here.)



chart image

Source: Secret Crypto Network
Click to enlarge


To put these returns in perspective it helps to know the amount of time you would have needed to hold these virtual assets.

The laggard, with a 68.67% gain, entered the buy list in early September.

None of the other recommendations were made before July 2017. That’s when the service launched. Sam and Ryan made their most recent recommendation on 29 November.

By my back of the napkin maths, the average holding period — if you’d acted on all nine recommendations — is just over four months. For an average gain of 330%. Without a single loser.

That’s a big part of their focus. Steering readers away from the deluge of what Sam likes to call ‘crapcoins’. The tokens that will fall, and never recover.

When did you first hear of blockchain?

Of course, I wouldn’t be writing any of this to you if not for blockchain. That’s the distributed ledger technology behind every crypto.

And, as you may know, blockchain is revolutionising far more than just the world of currencies.

Over in the US, a penny stock just saw its share price leap 233% simply by announcing its intention to invest in blockchain markets.

From Bloomberg:

A little-known New Jersey firm that, as recently as 2011, specialized in renewable energy projects just became the latest to join the blockchain and cryptocurrency craze.

The penny stock TGI Solar Power Group Inc. said in a statement Tuesday that it planned to get involved in the “Blockchain and Crypto hot commodity market.” The news sent TGI’s shares more than tripling…

The company said it will use a platform known as Databoss to invest in blockchain markets and would provide an update “in coming days.”’

Ryan Dinse has been atop this breaking trend since the beginning. It’s why he launched his small-cap investing service, Exponential Stock Investor.

In this service he hunts down small-cap stocks that look set to see their share prices soar from what he labels ‘the blockchain collision’.

You can find out more here.

Now a quick look at Australia’s cooling property markets.

Tasmania to the front

When you think about hot property markets, Hobart may not be the first place that comes to mind.

Unless you’re Phil Anderson.

Phil, as you may know, is the editor of Cycles, Trends and Forecasts. It’s a great service in which he shares the knowledge he’s gained from a lifetime of studying stock market and property cycles.

Much of his decades of research are based on property cycles in the US, the UK, and right here in Australia.

When I had a chance to chat to Phil at an editorial roundtable session in mid-2016, it didn’t take long for the Aussie housing market to come up. With prices already rocketing in Sydney and Melbourne, I asked Phil where he saw the best opportunities in 2017.

His answer? Hobart.

And the latest data in from CoreLogic shows that Phil was — once again — spot on with his forecast.



chart image

Source: CoreLogic
Click to enlarge


As you can see in the above chart, Hobart led the nation with an average annual gain of 12.3%. That handily beats Melbourne’s 8.9%, and blows away Sydney’s 3.1%. Not to mention the losses witnessed in Darwin and Perth.

I can’t share where Phil sees the best opportunities for 2018. For that, you’ll need to go here.

I can share the following snippet from CoreLogic though. If you’re interested in becoming a landlord, don’t overlook Darwin.

The substantial fall in values relative to rents has pushed Darwin rental yields to their highest level since July 2015 (5.9%) and Darwin rental yields are the highest of any capital city.’

And finally…

In today’s Australian Tribune: ‘What Australia Could Learn from California’s Legal Marijuana Sales

The war on drugs began in the US more than 70 years ago.

From there it spread across the globe.

The lure of easy money drew tens of millions of people into criminal activity. And millions have been killed and jailed in this ill-conceived and failed war. One which has done nothing to stem the recreational use of drugs.

But just as the US was responsible for launching the global war on drugs, perhaps it will be responsible for ending it too…’

The Australian Tribune is Port Phillip Publishing’s new, politically oriented newsletter and website.

If you’re fed up with reading sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

Or visit our website at https://www.theaustraliantribune.com.au/ to read the complete article now.

Cheers,
Bernd