Don’t Place All Your Bets on Just One Crypto

Bitcoin reached new highs once again this week, pushing past US$7,500 for the first time. That’s after failing to breach that level last week, when instead it abruptly fell from US$7,458.79 down to US$5,857.32.

As investors, we love our ‘milestone’ numbers. Somehow $7,500 seems to mean so much more than $7,458.79. When in fact it means exactly $41.21.

Perhaps round numbers just make for better headlines?

At the time of writing, just before noon on Friday, bitcoin is up 1.62% for the day, at US$7,971.28. So it may be that we’ll see another psychologically significant record broken next week, at the US$8,000 mark.

Just how high can bitcoin go?

That’s not a rhetorical question. It’s a vitally important one for anyone investing in the crypto world. And it’s increasingly central for investors in financial technology. As well as banks, and an ever-growing list of markets affected by the rise of cryptocurrencies.

In a recent survey of bitcoin investors, we can find a staggering possible answer. LendEDU, who have published regular surveys of the bitcoin community, published their latest report on Wednesday of this week. When asked at what price they would sell their holdings, the average of the investors’ responses came to an incredible US$196,165.79.

Obviously, you have to take that answer with a grain of salt. The survey was conducted with 564 US citizens who own bitcoin. It will come as no surprise that bitcoin owners are likely to be bitcoin believers. A less enthusiastic analysis may point to a much lower target price for bitcoin.

On the other hand, $200,000 a coin may not be all that high. Not if bitcoin is ever to fulfil its intended role as an alternative currency or store of wealth. A kind of digital gold. The bitcoin algorithm is designed so that only 21 million bitcoin can ever exist. A drop in the ocean compared to the global money supply. If bitcoin were to become widely used in day to day transactions worldwide, your daily purchases would necessarily be in a tiny fraction of one bitcoin.

And as Ryan Dinse explained in Money Morning this week, new technology is making it easier to own and transact in cryptocurrencies almost daily. But, ominously for bitcoin hopefuls, the key point is that it’s becoming easier to transact in all cryptocurrencies. Not just the first. When you imagine the potential cryptocurrency future, it’s not one where all the world transact in a single crypto. Bitcoin’s many followers and rivals are just as likely to be part of that world.

Bitcoin may have paved the way, but the blockchain technology it’s founded upon is free for anyone to use.

Blockchain technology is here to stay. Whether bitcoin ever reaches its US$200,000 target or not.

The uses aren’t limited to creating more alternative currencies, either. Blockchain is rapidly expanding to every corner of the economy. From changing how companies use and share big data, to revolutionising privacy and analysis in healthcare, blockchain tech is on a collision course with markets.

The potential is so large that Money Morning editor Ryan Dinse has recently published a special report on opportunities you could buy into today, in order to ride the blockchain tidal wave. You can check out that report here

This week in Money Morning

Markets were running strong early this week, in spite of the state of global politics. As Ryan wrote on Monday, investors seem to be ignoring international turmoil, presidential name-calling and European factionalism. Both the US and Aussie markets were hitting new highs, and emerging markets were also doing well. To read why, you can find Monday’s article here.

Then on Tuesday, Ryan wrote about a technology that’s driving incredible gains on the stock market. But not cryptocurrency or blockchain. This is a sector of the biotech industry that has had some attention lately — but not nearly as much as Ryan argues it deserves. To find out what it is and why Ryan believes every single stock involved in it could be headed up, click here.

With Amazon’s arrival in Australia coming any minute, on Wednesday Ryan looked at a bit of the history of e-commerce. He explained why Aussie retailers are in so much danger. And he looked at an e-commerce giant that makes Amazon’s foray into Australia look insignificant. Click here to read the details.

Thursday’s article looked at why interest rates are likely to rise in Australia. And quicker than most expect. The mainstream doesn’t see it, but Ryan argues that there are three crucial reasons why interest rates have to move. That will mean both good news and bad news for Aussie investors. But as Ryan says in the article, forewarned is forearmed. Get forewarned here.

Ryan closed the week with a look at an app that’s making it easier than ever before to transact in the cryptocurrency of your choice. Or any currency, potentially. By removing barriers to entry, this kind of tech could perhaps help bitcoin one day meet the incredible potential we talked about above. Read more here.

Until next week,

Tyler Jefferson,
Editor, Money Weekend

Tyler Jefferson joined Fat Tail Investment Research in 2012. With a background in publishing, he started out as part of the team working behind the scenes with your Editors to bring you Money Morning each day.

When he joined, Tyler was Fat Tail Investment Research’s 12th employee. Today that number has grown to over 50, as more and more readers turn to Money Morning as their source for independent financial analysis and ideas.

Today as Managing Editor, Tyler still edits the articles you read each day. Along with that, he occasionally contributes to Money Morning with his own irreverent take on the most interesting news and opportunities for you.

Money Morning Australia