Bitcoin analysis.pdf

My Account (//palmbeachgroup.com/)

Palm Beach Con-dential WELCOME, SUBSCRIBER

HOME (HTTP://PALMBEACHGROUP.COM) › POSTS (HTTP://PALMBEACHGROUP.COM) › KEYS TO SURVIVING VOLATILITY

Keys to Surviving Volatility By Teeka Tiwari on June 28, 2017

Print !

Dear Reader, I’m in Copenhagen this week attending Money20/20, a conference on digital payments. There’s a huge push in Europe for alternative banking, backed by a new law. And I think a similar trend in the U.S. will bring a lot of innovation and opportunity to this space. Now, if you’re a new reader, the volatility in cryptocurrencies this week might make you apprehensive. But if you’ve been with me for at least a year now, you know this is part of the cycle. Any day of the week, a cryptocurrency can be up 200% or down 50%. We’ve seen this several times. That’s just the nature of this asset class. So, this week, I want to emphasize how we’ve weathered this storm in the past and share my advice on how we’re doing it again. Scroll down to watch the update or read the transcript. To download the MP3, click here (https://pbg-assets.s3.amazonaws.com/editorial/pbo/audio/20170628-pbo-update.mp3). Let the Game Come to You! Big T

Video Update

Transcript Hello, friends, and welcome to this month’s Palm Beach Confidential update.

Money20/20 I am coming to you from a hotel room in Copenhagen, Denmark. I’m here attending the Money20/20 show. This show is all about digital payments, so-called fintech, and also how the blockchain is being used to facilitate digital payments. So, this particular event is really filled up with a lot of European startups, as well as a lot of European banks. It’s this pretty equal mix between suits, what I call “suits and hoodies,” right (programmers, startup guys), and suit-and-tie Wall Street types.

"

So, we’re seeing an enormous push in Europe for alternative banks and alternative finance companies. It has to do with a law that is coming into place here called “PSD2.” And what PSD2 is, it’s a directive being put out by the European financial services that opens up the banking infrastructure to startups. So, this is why you’re going to see a proliferation of new financial startups in Europe. Now, the OCC—which is the regulatory organization for banks in the United States—is pondering a similar set of rules to make it easier for American startups to start encroaching in more traditional finance areas. We believe that will happen, and it will again create really an explosion of innovation in this space. Now, one of the key things that I want to talk about that has come up so far at this event is that the head of payments for Airbnb was giving an interview yesterday, and one of the things they were asked about was bitcoin. The reason why is that Airbnb just hired—they called it an “acquisition/hiring” of virtually all the talent out of a major blockchain company. They are actively looking at potentially adding bitcoin to the platform. Now, Airbnb is now the largest operator of hotel rooms on the planet. If they start incorporating bitcoin into their platform, it will be hugely bullish for the bitcoin price. So, let me be clear: The head of payments, you know, was using a lot of hedging language. It’s certainly not a done deal that they will be using bitcoin, but they are looking at it very seriously. They are investing a lot of money into analyzing this technology and seeing if it makes sense to add it to their platform, but again, if they do—incredibly bullish for bitcoin.

Cryptocurrencies Under Pressure So, let’s talk a little bit about cryptocurrencies. They’ve really been coming under a lot of pressure for the last week or so. Now, if you’re relatively new to the cryptocurrency space, this is going to be very disruptive to you. Some of you might even be feeling extremely distraught about the level of volatility that we’re seeing, and I’m sure some of you at some point are going to be emailing me kind of doing the Monday morning quarterback, “Well, why didn’t we sell when X, Y, Z was this price?” “Why did you do this?” “Why didn’t you do that?” You know, that’s normal, that’s just part of this game, but I want to talk to you about, you know, this full cycle that we’ve been going through. I started recommending cryptocurrencies a year and a half ago. The first cryptocurrency I recommended was bitcoin. Bitcoin originally went from $428, when we started recommending it, up to $750, and we had a buy-up-to [price] at the time of $900. So, we were buying it all the way from $420 to $750. Then bitcoin went to $750 and then just crashed down to $500. I got a ton of emails, “How could you be telling us to buy bitcoin at $750 and up to $900 and now it’s at $500? What are you doing?” Again, I’ll say the same thing now that I said back then: These are very volatile, you have to position size appropriately and not get too crazy about the day-to-day volatility, because in any single day of the week, cryptocurrencies can be up 200% or down 50%. On any day. That’s just the nature of this asset class. So, bitcoin is not the only coin that we’ve experienced a lot of volatility in. Ethereum I first recommended at $9.50—around that, $9–$9.50. Two weeks later, it went to $7. I got a lot of emails, “Oh, how could you buy/recommend this crazy thing? We bought it at $9.50, it’s down at $7.” And again, I did a video pretty much like this and said, “Look these are volatile, don’t worry about the short term. A couple of points is not going to make a big difference in the big picture.” And then shortly after that, Ethereum went up to $20, and we had a buy-up-to of $20, so we were buying all the way from, you know, $9.50, $7.50, all the way up to $20. Then in the Ethereum network there was this hack, not of the network itself, but of this DAO contract, and Ethereum decided to split into two. And it created all of this fear and uncertainty and doubt, and we saw Ethereum crash 75%—got down to $5. Again, I got a whole other series of emails, “Oh, you’re an idiot,” “We bought at $20,” “We bought at $15,” “We bought at $10 and now it’s at $5,” “I can’t believe you did this to me,” you know, on and on and on. I got in front of the camera again and said, “Look these are volatile, don’t worry. Ethereum is going to survive, it’s going to thrive, and it’s going to go much, much, much, much higher,” which of course it did. Ethereum runs up to $50. I get thousands of emails saying, “Well, Ethereum is $50 now, it’s time to take profits.” I say, “Hold on, it’s not quite time to take profits yet.” Ethereum drops to $35 from $50, I get thousands more emails. “See, I told you we should have sold at $50, Ethereum is at $35. Tiwari, you’re an idiot.” I say, “Okay, I might be an idiot, but I don’t think I’m an idiot about this, so just be a little bit patient.” And of course, you know, Ethereum has gone to over $400. Now it’s come back a little bit, and it’s trading at about between $200 and $230, but this is normal. This type of volatility is very normal. So, you know, we’ve seen it in bitcoin and we’ve seen it in Ethereum; we even saw it in Monero. I first started buying Monero at $12, that went to $20, and then we bought some more at $8, and then it went to $5, right? That was another 75% drop from the high to the low, and it was the same deal. I said, “Look, these are super volatile, on any day of the week they can be all over the place. Do not worry, focus on the big picture.” Since then we’ve seen Monero get as high as $60, okay?

Keys to Surviving the Volatility So, what am I telling you? I’m telling you that cryptocurrencies are hyper-volatile. You have to look at the big picture. If you’re sitting in front of Coin Market Cap, and you keep refreshing the page, you’re going to drive yourself absolutely crazy, okay? You’re going to drive yourself absolutely nuts. This is a hyper-volatile market. Now, to put this in perspective how far I think we have to go: The entire cryptocurrency market right now is only $90 billion big, and that’s tiny. If you look at just one unicorn, Uber, right, Uber is worth $68 billion, and it’s a business that loses billions of dollars a year. It’s actually a terrible business model that Uber has, but it has a market cap of $68 billion. You look at cryptocurrencies, the whole market cap of the whole space is now under $100 billion. I would bet there’s at least a dozen Ubers in the cryptocurrency space right now just waiting to emerge. So, what I’m saying is that, yes, the cryptocurrency market has moved a lot, but it’s still got a lot more to go. Now, I don’t know how long this pullback period is going to last. It might last another week, it might last another month, it could last six months; my point is it doesn’t matter, because it is temporary. The long-term picture in cryptocurrencies is extremely bright. What you need to do in order to stay rational through this process so you’re not driving yourself crazy or me crazy with a million emails is to be rational with your position sizing. If you’re rational with your position sizing, it doesn’t matter what these things do on a day-to-day basis. You’ve got the staying power to sit through the volatility, and that is what is critically important to making an absolute ton of money on a small amount of money in cryptocurrencies, okay? If you’re freaking out right now because of this volatility, chances are you didn’t listen to me with your position sizing. Chances are you probably put too big of a position on and it’s driving you nuts. I understand. You know, you got to sell down to your sleeping spot, right, to the spot where you’re not freaking out anymore. But if you’ve listened to me and you put, you know, $200–$400 into an idea if you’re a smaller investor, $500–$1,000 if you’re a bigger investor, then you should be sleeping like a baby. None of this should be bothering you at all, right? And especially if you’ve been with me for more than a year, you’ve been through the cycle, you’ve sat through a 75% drawdown on Ethereum, a 75% drawdown on Monero, a 50% drawdown on bitcoin. That’s just the way these things trade. So again, friends, I would ask for you to continue to be rational in your position sizing, focus on the big picture. Remember that cryptocurrencies are still just really tiny, a really tiny asset class in the overall sizing of asset classes out there, and that we are at the very beginning of this journey. I know it feels like we’re deep in the process, but we’re really not—we’re right at the beginning of this journey, and there’s a lot more to come ahead.

News Stories on Ethereum Okay, I think that is enough out of me. Oh, yeah, just a couple of other things before I forget. So, a couple of new stories in Ethereum that you might be reading about. One was—one rumor was that Vitalik Buterin was dead, which hammered Ethereum. He is not dead. He proved that he is alive, so that’s good news. The other thing that you might be reading about is that the Ethereum network has a tremendous amount of congestion. It’s being used so much that it’s starting to slow down. This is part of the reason why we’re seeing a lot of volatility in the price of Ethereum right now. The reason why I wanted to bring to this up is that in the mid ’90s, in the mid to late ’90s, America Online suffered the same problem. I mean, that was the gateway that most people used to get on the internet. I remember sometimes you’d have to wait two hours before you could get an open phone line to actually get on the internet. It was ridiculous. They would slam the stock every time AOL would have a major outage. But you know, once they cleared up that outage, you would just see the stock roar back higher again. So, while you might be reading a lot of negative news about Ethereum with this problem with network congestion, I would postulate that this is actually very positive. It’s showing just how much use people are getting out of the Ethereum network, and whenever anything is being used that much, the people that are behind it are heavily incentivized to fix it, to make it scale. So, this is something I wrote about last month, this issue of scalability. It’s a huge, huge opportunity. The internet went through the same problem with scalability. The early internet did not scale; it wasn’t ready for primetime. But you know, as millions of people started crowding onto the internet, you saw the brain power and the money solve that problem of scalability, and they’ll do the same thing with the cryptocurrency space. So, don’t sweat that. Use it as an opportunity to get long if you’re not already long.

So, if you’re new to Palm Beach Confidential, this is just a phenomenal opportunity for you to initiate a bunch of new positions in your portfolio. And if you’re already long, don’t sweat the volatility. I’ve always told you from the very beginning these assets are volatile, but as long as you’re rational and position size appropriately, you’re going to make an enormous amount of money. Alright, friends, that is enough out of me. I will catch up with you in the next video. I want you to always remember… Let the Game Come to You!

© 2017 Palm Beach Research Group. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This website may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Palm Beach Research Group, 55 NE 5th Avenue Suite 100, Delray Beach, FL 33483.