Bitcoin Price Rockets to New Record of $6,000!
The Bitcoin price briefly touched $6,000 today, before correcting a bit. The price rise is being driven by a number of factors, including an upcoming Bitcoin Gold fork. Investors are buying Bitcoin in anticipation of this fork, as they will likely receive an equal number of new tokens in Bitcoin Gold for every Bitcoin they hold. The price chart below shows the rapid rise over the past month.
The hard fork is projected to occur in 5 days, on October 25. I expect the price of Bitcoin to continue rising up until the fork, potentially to as high as $8,000. But we are likely to see a significant correction after the fork occurs, as money shifts out of Bitcoin and back into some of the more undervalued alt-coins.
At the high, the total market capitalization of Bitcoin reached $100 billion. The market cap of all cryptocurrencies is around $174 billion, giving Bitcoin market dominance of 57%. The next closest cryptocurrency is Ethereum, with a market cap of $29 billion or less than one third of the value of Bitcoin. The image below shows the top ten cryptocurrencies by market capitalization.
It appears that China will not actually be banning cryptocurrencies and ICO’s, just regulating them. This news had a positive impact on prices of cryptocurrencies. To the dismay of JPMorgan CEO, Jamie Dimon, the price of Bitcoin has soared over 50% in the past month since he said “Bitcoin is a fraud.” There was a temporary dip on his comments and it appears that JPMorgan was buying the dip aggressively, for themselves or for clients, even as Jamie was publicly bashing it. The price is now up roughly 15X since he said “Bitcoin will not survive” back in November of 2015.
It is not surprising to hear Jamie Dimon and other bankers make critical comments about Bitcoin and other cryptocurrencies. After all, this technology significantly reduces the need for traditional banking and may one day make it obsolete. Thus, it is a direct threat to his business and his personal fortune.
We first covered Bitcoin for subscribers around $100 and officially added it to our model portfolio under $1,000. In 2017 alone, our investment in Bitcoin is up 570%! While this is a staggering return, it pales in comparison to the returns we have realized from our investment in Ethereum. The #2 cryptocurrency, which has built a smart contract platform, is up roughly 2,700% year to date!
Initial Coin Offerings (ICOs)
Beyond investing in cryptocurrencies that trade on exchanges, we have also been investing in initial coin offerings (ICOs) or token sale events. This is a way to become an early investor in disruptive blockchain companies before their coins are publicly traded. Many of those investments went up 4x to 5x in a matter of weeks.
Thus, we created an ICO tracker that rates the various coin offerings on multiple criteria and assigns each company an overall score. Below is a screenshot of the tracker to give you an idea of the work that we do analyzing cryptocurrencies. Our top picks have been masked out of respect to paying subscribers.
Is it Too Late to Invest in Cryptocurrencies?
Many investors that were initially skeptical or hostile towards cryptocurrencies are starting to come around and asking if it is too late to buy. While I am not an investment adviser and do not have a crystal ball, I believe we are around the 2nd or 3rd inning of the cryptocurrency revolution. The blockchain is the biggest technological innovation since the Internet itself and it is probably in the dial-up phase of Internet, if we were to compare their timelines. It is estimated that less than 1% of the world population owns any Bitcoin. As this number continues to increase, there will be more and more fiat money chasing a finite number of bitcoins. Only 21 million will ever be created and 16.6 million are already circulating.
While the value of Bitcoin has rocketed substantially higher in 2017, it is important to maintain perspective. At $100 billion, the value of Bitcoin is still significantly less than Facebook at $508 billion or Amazon at $475 million. But since Bitcoin acts as money, it is probably more relevant to compare it to the USD, which as over $1.5 trillion in circulation (15x the value of Bitcoin) or physical gold which is valued at $8.2 trillion (nearly 90x the value of Bitcoin). And of course, Bitcoin is worth just a fraction of the value of all physical money in circulation ($31 trillion), the stock markets ($67 trillion) or all money including bank deposits (estimated at $84 trillion).
The chart below is a bit outdated now, but still helps to illustrate the points made above.
The bottom line is that we believe Bitcoin and other cryptocurrencies are headed much higher. In our view, it is not too late to start investing in this sector. As usual, you should consider waiting for dips and buying in tranches. You can get our Contrarian Report investment newsletter, model portfolio, top cryptocurrency picks, ICO tracker, email trade alert and more by clicking here.
