Bitcoin dropped slightly today on news that Korean crypto exchange OKEx is under investigation by Korean authorities. OKEx has suspended withdrawals — apparently due to at least some of its holdings being held by police.
This is not great news. But it’s not horrible news either. There are hundreds of exchanges operating around the world. It’s inevitable that problems will pop up at some of them.
I’m more focused on the bull case for bitcoin. I believe we’re in a very nice spot. Fundamentals are lining up with the macro environment to make for a very potent combo.
If you haven’t read my Friday editorial on Early Investing, here’s the link. In the article, I detail some extremely bullish developments for bitcoin.
For example, Square — a fintech giant worth $82 billion — recently purchased $50 million worth of bitcoin for its treasury. Here’s a quote from my article.
Square didn’t buy this bitcoin to sell it to customers (although they do that). Square bought bitcoin as a reserve asset — or store-of-value. I suspect it’s a fiat currency hedge. And a potentially lucrative alternative to Treasury bonds and bills, which basically yield nothing today. This is a huge vote of confidence for crypto, as even JP Morgan acknowledges.
Institutions are finally making the long-anticipated move into bitcoin. The Square news follows word that legendary investor Paul Tudor Jones also has taken a sizable stake in Bitcoin.
On top of this, Fidelity Digital Assets just released a bombshell 29 page report (PDF) on why bitcoin is attractive as an alternative asset. It makes a great case.
As of 4:00PM on Friday, Bitcoin was only down 1.2% over the last 24 hours. Bitcoin is handling the OKEx news quite well — thanks in large part to the overwhelmingly bullish macro backdrop. Interest rates are near zero around much of the world — and bonds yield practically nothing.
I believe the risk/reward in BTC right now is slanted dramatically towards the upside. If bitcoin continues to rally, it’s likely that high quality altcoins will follow. I’ve been spending a lot of time lately analyzing the altcoin market. And I expect to make a few new recommendations over the coming months. While Bitcoin has the potential to return 5x over the next few years, very high quality altcoins could do even better.
On the macro side, I expect a massive, multi-trillion dollar stimulus package to pass in the next few months. It’s going to happen even though political concerns around the election are holding it up. We can’t stop spending — or printing money — anytime soon. Americans are hurting, and more stimulus is inevitable.
I’m more focused on crypto than I’ve been in a long time. Stay tuned.