Nick’s Note: Cryptocurrencies are on a meteoric rise. And most investors fear they may now be in bubble territory. But there are smart ways to play—and profit—from bubbles.
Palm Beach Confidential editor Teeka Tiwari has delivered life-changing gains to his subscribers from the crypto boom. Today, Teeka shows how to keep ripping profits from the market all the way up…
Just recently, a newsletter guy wrote that the cryptocurrency space felt like 1998–1999.
(He was referencing the latter stages of the dot-com bubble.)
I’ll explain why I hope he’s right about that in a moment.
This, of course, is just another way of expressing the same fear I’ve heard for two years: “Is it too late to get into bitcoin?”
When he wrote his article in October, bitcoin was at $4,400. Since then, it’s reached new highs over $7,300.
Friends, over the next three years, bitcoin will trade for more than $25,000.
And if that newsletter fella is correct—and this really is like 1998–99—bitcoin will shoot to over $60,000.
In this essay, I want to show you why you must own some bitcoin now.
I’ll also show you how you can protect yourself from the day when (like all assets) bitcoin corrects in price.
There are many reasons why bitcoin will continue to rise.
Today, I am going to focus on one single metric. An analyst I respect says this metric has been responsible for 94% of bitcoin’s growth.
The Network Effect
Tom Lee is a polarizing figure…
From 2007–14, he was chief equity strategist at JPMorgan. He’s been top-ranked by Institutional Investor every year since 1998.
Today, he heads research at Fundstrat, one of Wall Street’s top research firms.
When everybody was bearish on stocks in 2015, Lee was pounding the table to buy. When the world went all-in bullish in 2017, Lee counseled caution.
Lee is a guy who’s unafraid of going against the crowd. That’s why I wasn’t surprised when he started getting bullish on bitcoin.
His argument is based on Metcalfe’s Law.
You see, Lee views bitcoin as a social network. And Metcalfe’s Law says the value of a network is the square of the number of its users.
We don’t need to get into all the math involved in Metcalfe’s Law. In short, it’s an equation that shows as more people join a network, the more valuable the network becomes.
Metcalfe’s Law is why Google, Facebook, and Alibaba are worth $689 billion, $500 billion, and $450 billion, respectively.
In a recent interview, Lee explained that over the last four years, 94% of bitcoin’s price move is explained by this equation.
Networks tend to be self-fulfilling prophecies. That means as more people use them, they attract even more users.
Think about Facebook.
Ten years ago, my 75-year-old father-in-law would have called it a stupid waste of time. Today, he’s all over Facebook because all of his friends are on Facebook.
This same “network effect” is now working in bitcoin’s favor.
Bitcoin usage is growing at 122% per year. It’s one of the reasons why Lee thinks bitcoin will hit $25,000 in three years.
But it could go even higher than that…
How to Profit (and Protect Yourself) in a Bubble
People who don’t understand the network effect will continue to question bitcoin’s valuation… just like they’ve done with Facebook, Alibaba, and Google.
But if you had the courage to defy the naysayers and just pick up a small position of $500 in each when they went public, you’d be sitting on $15,173 today.
And that brings us to how to handle the eventual day when bitcoin’s rise comes to an end.
At Palm Beach Confidential, we use a technique called “asymmetric risk” investing.
This is when you invest a small amount of money into an idea that can have a massive move higher.
The beauty of this approach is if the idea goes to zero, your loss is very small. But if the idea skyrockets, your payoff is huge.
As the market moves up, you want to harvest profits. This is exactly what we did recently in one of our crypto plays.
Subscribers who invested $400 in this particular recommendation have taken profits three times.
They’ve pulled out their original investment—plus an additional $2,300 in realized profits. That’s money in the pocket… and they still hold 40% of the original position.
So even if this idea went to zero tomorrow, they’re still up 475% on their initial investment.
One of my subscribers, Jon M., is an example of this strategy in action. He used this same approach to turn $250 into $125,000.
Recently, we used this approach on another idea. We’ve been able to harvest gains of 582%, 1,522%, and 1,016% all from the same idea.
This is how we manage “bubbles” at Palm Beach Confidential. We profit from them.
We’re not just going to ride it up and then ride it down. We’re going to continue ripping profits out of the market all the way up.
And when the bubble does burst… we’ll be safely nestled on top of the big pile of realized profits that we’ve taken along the way.
That’s why I sure hope that newsletter guy is right about this being like the 1997–98 dot-com bubble.
From 1997 to 2000, Amazon went up 800%… Oracle went up 523%… and Cisco went up 447%. The entire NASDAQ grew by 99%.
If bitcoin grows at a similar rate, we’ll easily see $60,000 per coin. And you can bet we’ll be harvesting gains all the way up.
Editor’s Note: Teeka’s so bullish on bitcoin that he bought $1 million worth to give away as part of a special event, “The $1 Million Dollar Bitcoin Giveaway.” If you missed it, there’s still time to claim your portion of this money. All you have to do is watch this free replay of the event.
In the video, Teeka sits down with a mystery guest—one of the cofounders of the second most popular cryptocurrency in the market. And he reveals the name of what he’s calling “the next big thing in cryptocurrencies.” You can watch it right here.
Let the Game Come to You!
Editor, Palm Beach Confidential
P.S. I’m so bullish on bitcoin that I bought $1 million worth to give away as part of a special event, “The $1 Million Dollar Bitcoin Giveaway.” If you missed it, there’s still time to claim your portion of this money. All you have to do is watch this free replay of the event.
In the video, I sit down with a mystery guest—one of the cofounders of the second most popular cryptocurrency in the market. And I reveal the name of what I’m calling “the next big thing in cryptocurrencies.” You can watch it right here.