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In This Issue:
Exceptional Investing
Stablecoin Competition
Google Takes Matters Into Its Own Hands
Coinbase Expands North
Bitcoin Dump Or Pump? Here Is What To Expect Ahead Of The Halving
Exceptional Investing
Imagine that I polled my followers on X and asked the following: “What do you consider exceptional investing?” What sort of answers do you think I would get?
Only Bitcoin investors who bought before 2015?
Consistently beating the S&P 500 year over year?
Having endless cash to buy every dip?
Having an IQ over 150?
Being an emotionless robot?
Always having perfect timing on trades?
All of these feats are commendable, and for some hardworking and genetically gifted individuals, they are possible. However, the average person (like most of us) will never meet these qualifications. I have good news - none of the above really matters.
Let’s model a portfolio for someone with a modest amount of capital to invest over their career who invests at the absolute worst possible times, I am talking the absolute peaks: December 1968 (an all-time high six years in the making), then 1973 (four years in the making), followed by the tops in 1987, 1999, 2007, 2020, and today’s top ‘sort of top’ on April 5th.
If $10,000 is invested at each top, this is a total of $70,000 invested over a lifetime. I'm aware that the $10,000 in 1968 when adjusted for inflation is the equivalent of a solid salary today, but let's go with the flow for a moment and examine the returns from each individual investment.
1968: The S&P 500 was around 94 points in 1968. If $10,000 was invested then, it would have grown to approximately $10,000 * (5,147 / 94) = $548,404.
1973: The S&P 500 was around 120 points in 1973. If $10,000 was invested then, it would have grown to approximately $10,000 * (5,147 / 120) = $430,583.
1987: The S&P 500 was around 335 points in 1987. If $10,000 was invested then, it would have grown to approximately $10,000 * (5,147 / 335) = $151,358.
1999: The S&P 500 was around 1,350 points in 1999. If $10,000 was invested then, it would have grown to approximately $10,000 * (5,147 / 1,350) = $37,985.
2007: The S&P 500 was around 1,550 points in 2007. If $10,000 was invested then, it would have grown to approximately $10,000 * (5,147 / 1,550) = $32,935.
2020: The S&P 500 was around 3,300 points in 2020. If $10,000 was invested then, it would have grown to approximately $10,000 * (5,147 / 3,300) = $15,623.
2024 (Today): If $10,000 was invested today, it would be worth $10,000… duh.
So, the total value of the portfolio would be approximately $1,226,888.
If you want to focus on just these three data points—1999, 2007, and 2020—the return was a 2.88x increase in the portfolio. However, if we include the 2024 investment at the very top and the others, the return is a whopping 17.53x. Every dollar put in the machine yielded $17 over a 60-year timeframe.
Is this really the least exceptional investor we can conjure? Hardly. I would argue the opposite; this is an exceptional investor.
Exceptional investing comes down to one thing: holding for a long period of time—a lifetime, if you will. Successfully guessing the right stocks, outpacing the market, buying dips, and getting in 'early' can mix in some serious compounding effects, but nothing beats time in the market. Buying Bitcoin or the S&P 500 today might look expensive, but what do you think it might look like in 30 or 40 years? Markets trend up.
Life throws curveballs at everyone, so drawing down on the portfolio from time to time is part of the process. The good news is that all of us are already ahead of the curve because of our shared interest in crypto. We have a significant advantage just by being here.
If you find yourself frustrated with the market this weekend, take a deep breath and zoom out. Assets are pointing up; it's just on us to give them the time they need to grow. We are all capable of being exceptional investors.
Stablecoin Competition
The stablecoin market is booming! Tether recently surpassed the $100 billion mark, USDC has added $7 billion year-to-date, Ethena successfully launched ENA, and Cardano is gearing up to launch USDM this month. Additionally, several other companies and countries are preparing their stablecoin platforms for launch, which we will probably never hear about. And, to top it off, Ripple and VanEck just announced their entry into the market in the past couple of days.
If 2017 was characterized as the ICO Boom, it might be fair to categorize 2024 as the stablecoin boom. Considering many of these companies are issuing solely to capture interest rates via their backings, I can’t imagine all will survive over the next few years. However, the opportunity is ripe for the picking right now, with no sign of a recession or FED cut on the horizon.
Here are some of the details on the respective launches:
Similar to how other major stablecoins are operating, “Ripple’s stablecoin will be 100% backed by US dollar deposits, U.S. government bonds, and cash equivalents, and Ripple pledges transparency with monthly third-party attestations, ensuring trust and reliability.” According to Ripple, “the stablecoin market is forecasted to exceed $2.8 trillion by 2028,” so it’s no surprise they want in on the action. Also interesting is that the stablecoin will function on both the XRP Ledger and the Ethereum blockchain.
As for VanEck’s product, “AUSD will be fully backed by cash, U.S. Treasury bills, and overnight repo agreements, while $90-billion asset management firm VanEck — where Jan van Eck is CEO — will manage a fund for Agora’s reserves.” One of the key figures behind AUSD is none other than Nick van Eck, the son of investment management legend Jan van Eck. One thing to note about Van Eck’s launch is that AUSD will only be available outside the U.S. until Van Eck believes there is more regulatory clarity.
USDC might have Coinbase in its corner, but unless other stablecoins start following Tether's lead by building their Bitcoin reserves, Tether's lead will only widen vs every other stablecoin. Right now, Tether is in a league of its own.
Google Takes Matters Into Its Own Hand
Google is initiating a lawsuit, which it claims is a first of its kind, against two China-based app developers. These developers have allegedly been stealing crypto from unaware users who trust the apps they download from the Play Store. According to Google, the scam has been ongoing since 2019, involving more than 87 apps and impacting over 100,000 victims, with losses ranging from $100 to tens of thousands of dollars. The scam operates by asking for a deposit, then faking returns and failing to return the funds. It further extorts victims for more funds and demands high withdrawal fees, which are obvious red flags. Not one of the most sophisticated of scams, but effective none the less. You have probably seen one advertised in the comment sections of my YouTube videos, which is unfortunately out of my control.
Why is the SEC ignoring this and coming after reputable projects?
Coinbase Expands North
Around this time last year, Binance was preparing to exit Canada as the country introduced new and strict guidelines for crypto exchanges, including customer limits and complex registration requirements for crypto firms. However, today, Coinbase has successfully obtained all the necessary legal requirements for crypto operations in Canada and can operate fully and legally in the country. According to Coinbase’s country director for Canada, “the market opportunity in Canada is sizable,” and “the registration in Canada makes Coinbase the first international and largest cryptocurrency exchange that’s registered in Canada.”
In other Coinbase news, popular broker Oppenheimer has raised the price target for the exchange to $276 from $200. However, the problem with research reports making price predictions is that they are often too focused on being right rather than providing a genuine forecast. While Oppenheimer acknowledges that COIN is positioned to greatly benefit from trading volume and other verticals, they are only willing to adjust the target by $20 from its current position. If the metrics come in as high as predicted, COIN would definitely rise by more than 10%, barring a larger market correction.
Since you made it this far in the letter, my low, average, and high price estimates for Coinbase's price this cycle is $500, $750, and $1,000.
Bitcoin Dump Or Pump? Here Is What To Expect Ahead Of The Halving
Join me and Simon Dixon, CEO & Co-founder of Bank To The Future, as we analyze what's happening with Bitcoin and what to expect ahead of halving.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.
You have the best news letter.The information you provide is so valuable and important. I trust your research and respect your down to earth honest opinions. Thank you for all you do for this community and the help you provide to all of us.