For now, it appears that our decision to take some profits last week may have been wise. Crypto is correcting pretty hard right now — which is perfectly normal and should be expected. I would be very worried if we weren’t seeing sizable corrections.
Ethereum is down 8% over the last 24 hours as I write this Friday morning. And Binance Coin is down around 12%. Most altcoins in the top 100 do seem to be selling off, but there are some notable exceptions. Cardano has been extremely strong and is up almost 5% over the last 24 hours.
I suspect the pullback’s catalyst is the rise in interest rates and corresponding fall in stocks. But really we just needed an excuse to take some profits and sell-off after a MONSTER run.
My long-term outlook remains the same. The fundamental factors are in place for this bull run to continue for a long time to come. Needless to say, there will be volatility along the way. But you already know about that if you’ve stuck around this long.
Bitcoin vs. Gold & Silver
One thing I am monitoring is the fact that bitcoin is starting to become competitive with gold. Bitcoin’s market cap is currently just under $1 trillion. The estimated value of all above-ground gold (worldwide) is around $8 trillion.
At the current exchange rate of bitcoin/gold, you can get almost two pounds of gold per bitcoin. And you can trade one BTC for around 1,400 ounces of silver.
This is a little shocking — even to me, a long-time BTC bull. It’s still a little hard for me to believe that bitcoin could surpass gold’s market cap. But I suppose I need to get used to the idea that bitcoin could surpass gold in the next 5-to-10 years.
I believe that gold and silver remain dramatically undervalued compared to bitcoin. After all, they serve roughly the same purpose: a speculative store of value and inflation hedge. Metals have less upside, but much less downside as well.
So I’m considering swapping a small portion of my crypto for precious metals. Needless to say, I will continue to hold the majority of my crypto for the very long term. But the exchange ratio for gold and silver is becoming pretty darn tempting at these levels. I continue to believe that gold and silver aren’t going anywhere and will remain a vital part of the economy for hundreds of years to come.