Riding a Tsunami of Mainstream Money


The mainstream is well and truly coming for bitcoin.

As of 10 December, the Chicago-based Cboe Futures Exchange will become the first US exchange to list bitcoin futures. The shock announcement came this week. Cboe won’t have the spotlight to themselves for long, though. Rival Chicago futures exchange CME had earlier announced their own bitcoin futures. Those will list on 18 December.

The news saw bitcoin push to record highs this week, over US$16,000. I should say ‘more’ record highs. I’ve lost count of the number of milestones bitcoin has blown past in the last few weeks.

Cboe President Chris Concannon told Business Insider that similar products may be on the way for other cryptos. Ether and bitcoin cash are two likely prospects.

Fashionably Late

The sale of futures based on the price of popular cryptos will open up the market to a massive wave of mainstream money.

It’s a strange facet of the crypto story that Wall Street has been so late to the party. In most bull markets, the big institutional investors tend to know long before retail investors. It’s often when ‘mom and pop’ investors are finally getting onboard that the ‘smart money’ are taking their gains off the table.

Leaving every day investors holding the proverbial bag as the bubble bursts.

Not so with bitcoin. Or most other cryptos.

First because of bitcoin’s origins. Bitcoin was started by an anonymous figure, an apparent outsider from the financial world. And championed by similar outsiders. Bitcoin began in the unexplored corners of the internet. Where it stayed, in the early years. At first it was ignored by the mainstream. Later ridiculed and dismissed. Only now, with great controversy, is it being taken seriously. And only by some.

Even as the mainstream began to take notice, big money has often been unable to get into cryptocurrency. Hedge funds and investment banks often have strict rules about what they can and can’t invest in. This new asset class has risen to prominence so quickly, that it’s likely that many couldn’t react quickly enough.

Even if they could, they often invest in such large amounts that they couldn’t buy in to a fledgling cryptocurrency without hopelessly distorting the price.

So the big investors are only now stepping into the cryptocurrency world.

This is a clear sign that the ‘early days’ of bitcoin are over. Wall Street’s entrance to the market may mean added legitimacy. But it also means an end to an aspect of bitcoin’s rebellious status. It means an end to the days when individuals had an advantage, profiting from a new asset that the big boys couldn’t touch.

Are the greatest days for everyday bitcoin investors like you and I coming to an end? Perhaps. But cryptocurrency and technology expert Sam Volkering doesn’t think so. He believes that bitcoin — and many other cryptos, some still too small and early-stage for the Wall Street types — still hold incredible potential. You can read more in his latest research, here.

This Week in Money Morning

It takes a brave forecaster to warn of risks to the market while pretty much every sector is booming. There are signs of danger everywhere in the global economy. Ryan Dinse explained on Monday that the consequences of unprecedented central bank money printing have to come home to roost eventually. But it’s impossible to guess exactly where or when it will all start to come apart. Ryan’s wary of anyone who thinks they can.

So how do you invest, when you know that the music has to stop someday, but you don’t know when? For Ryan’s take, check out Monday’s Money Morning here.

Are cryptocurrencies a bubble? That’s the big question at the moment.

The explosive growth in the early years of bitcoin attracted plenty of bandwagon-jumpers. Much of the potential of bitcoin and other cryptos is still just that, potential. It remains to be seen whether cryptos can ‘grow into’ their huge valuations. And there will certainly be corrections and failed cryptos along the way.

As Ryan wrote on Tuesday, there are a lot of parallels between the crypto market today and the dot com boom of the 90s. Does that mean you should cash out your crypto and wait for the crash? Not at all. Because as Ryan explained, buying a dot com boom stock like Amazon [NASDAQ:AMZN] in 1997 would still mean excellent returns today.

So how do you find the cryptos that will survive, and avoid the ones that won’t? For Ryan’s take, check out Tuesday’s Money Morning here.

On Wednesday, Ryan revealed what he believes to be the most important, simple truth in trading. Whether trading stocks, cryptos, or anything else. Forget about complex algorithms and models, forget about charts and indicators. There’s really just one thing you have to understand. You can read Wednesday’s Money Morning here to find out what it is.

There’s an unnoticed boom getting started in Australia. That was Ryan’s argument on Thursday. Taking a break from the world of cryptocurrencies — not easy when the possibilities are so exciting — Ryan looked at a relatively forgotten sector of the economy. If he’s right, the quiet recovery here could be the beginning of a major bull market for the sector. Read the details here.

Then, returning to blockchain once more on Friday, Ryan looked at how it’s forming the foundation for a whole new world of innovation. The number of industries blockchain tech will revolutionise is startling. Not least if you’re one of the people whose job may be threatened. The breadth of jobs blockchain could replace may surprise you. But so may the number of investing opportunities. Read the details here.

Until next week,

Tyler Jefferson,
Editor, Money Weekend

Publisher’s Pick: Exponential Stock Investor.Think the recent boom in cryptocurrencies was breathtaking? Wait until you see the explosion in the technology behind cryptocurrencies in 2018. According to Ryan Dinse, it’s going to send the valuation levels of a clutch of unknown stocks soaring…In fact, these stock performances could match…or even OUTPACE…the very best technology stocks born in the 1960s and 1970s…[more]

Editor’s note: With the office closed early on Friday for Port Phillip Publishing’s Christmas party, there are no end-of-week market numbers this week.

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