We are in a new Bitcoin revolution as more companies and organizations add Bitcoin to their balance sheet. In the last 12 months, we have seen this with MicroStrategy, Square, and now Tesla. The CEO of MicroStrategy, Michael Saylor, has been very vocal about Bitcoin since his purchase which has now totaled over $1 billion in Bitcoin. It is my understanding that MicroStrategy has almost all of their cash in Bitcoin now. As a comparison, Square only invested $50 million in Bitcoin which is a small fraction of their total cash balance sheet. Just this past week, we found out that Elon Musk invested $1.5 billion in Bitcoin at Tesla. Even though these amounts vary, the new trend is very clear and it is reasonable to assume other companies will follow suit in the next 12 months. I predict that many more companies will buy Bitcoin in the next 12 months.
I remember conversations with old colleagues about Bitcoin and Ethereum years ago. Working in Tech, I was surrounded by super smart software engineers that were onto the latest trends. I had one friend that was using Bitcoin when it was under $10 a coin. One of my old VP’s had a large Ethereum mining operation, so I was fortunate to hear stories and insights from all of them. For over 4 years, I stayed away from crypto because it seemed “too risky” for me. I remember the huge run up and crash in 2017/2018 and it just didn’t seem worth it to me. Especially when I was doing well with Tech stocks and ETFs, I didn’t see the need to deviate from my Tech and Software investing plan. It is rare to see a popular Tech stock drop by 70-80% in a short time period so I felt much safer with Tech and Software companies.
SCALE 89 is about high growth tech stocks:
The Environment is Changing
If you listen to some of the videos from Michael Saylor from MicroStrategy, he talks about how the US dollar is being debased and is losing value. Companies that are sitting on cash are now loosing money each year since the US government keeps printing so much money. Now with COVID and the enormous stimulus bills, this is happening on a greater extent since the US government is printing trillions of dollars. Moving assets over to Bitcoin is starting to make more sense, and Elon Musk and others seem to agree. Although, I think it is unwise to put 100% of cash in Bitcoin, I think most people and companies can find a happy medium that works for them.
Tesla recently invested $1.5 billion in Bitcoin
MicroStrategy raised another $900 million to purchase more Bitcoin
Square (Cash App) invested $50 million into Bitcoin in 2020
BlackRock recently announced they have “dabbled” in Bitcoin and are doing more research now
Thousands of companies and cities attended an event by MicroStrategy about Bitcoin
3% Crypto (And Growing)
Right now, I am at about 3% of my portfolio in crypto and I have both Bitcoin and Ethereum. For me, moving money around will cause tax implications so I am not going to move money quickly. I do anticipate that my position in Bitcoin and Ethereum will increase to 4-5% of my portfolio in the next 12 months. I am regularly buying more Bitcoin and Ethereum as I sell some of my call options that expire anyway.
7 months ago, I started positions in Bitcoin and Ethereum to get the ball rolling. Seeing MicroStrategy move significant money in Bitcoin was very interesting since I applied for a job there years ago. Their headquarters is just right outside DC so I am familiar with the company and I know people that work there. I started a small Bitcoin and Ethereum position and I think that makes the most sense for others. When you are starting a new position, it is ok to start small since you can always buy more later! There is no need to rush into a large position weather it is crypto, stocks, or ETFs. Start with an amount that you are comfortable with and then go from there. You can always buy more when you are ready!
“In an expansionary, monetary environment, you want scarce assets…The scarcest asset in the world is Bitcoin. It’s digital gold.” — Michael Saylor, CEO of MicroStrategy
5 Reasons To Consider Bitcoin
Bitcoin is the most popular crypto currency right now
Large companies and Fortune 500 orgs are now buying Bitcoin for their balance sheet
Bitcoin is a scarce asset with only 21 million coins available
Well known banks and hedge funds are buying Bitcoin like BlackRock
People now consider Bitcoin to be “digital gold”
If you are new to Bitcoin there are several top rated books in Amazon that you might want to read. I am now reading “The Bitcoin Standard” and “Bitcoin Billionaires.” You can also read the original Bitcoin whitepaper by the creator Satoshi Nakamoto. Please be mindful that there are Bitcoin groups and scams on the internet. Always do your own research and get information from multiple sources.
After doing my research and talking to several experts in the field, I decided to go with Coinbase and Coinbase Pro. First you will need to create the Coinbase account and then you can upgrade to Pro — they are both free to sign up. The Pro version has LOWER fees so this is a no brainer. You can go to their website to learn more about their products. I personally find the Coinbase products very easy to use and they offer access to multiple types of coins. Coinbase also has educational videos about Bitcoin and Crypto and these are very helpful for new users.
Predictions Around Bitcoin & Crypto
More companies, organizations, and governments will start a position in Bitcoin. Rumor is that Oracle is now considering Bitcoin.
Cities and local governments will also start positions in Bitcoin. I have read about Miami now making moves into Bitcoin.
Large banking firms or hedge funds will add more exposure to Bitcoin. Some have done this already.
In the next 9 months, I predict that Bitcoin will hit $100,000 per coin.
In the next 9 months, I predict Ethereum will hit $4,000 per coin.
New users will flock to alt-coins like Dogecoin due to the popular viral marketing and low cost per coin. Some new users think Bitcoin is “too expensive” due to the high cost per coin. New users and people unaware will be drawn to the popular memes with coins like Dogecoin. To my knowledge, Dogecoin has no real uses cases and is considered a meme / joke coin.
Crypto Position Size?
When you are starting a new position in a stock, ETF, or crypto, most people start small. Many experts will argue that you should start a new position in 1-3% of your total portfolio size. It is ok and totally normal to start small even if it is 0.1% of your portfolio. You can always add more later when you are comfortable with the stock, ETF, or crypto asset. There is really no right answer here, it is just what you are comfortable with. In my case, I started my Bitcoin position with less than 0.1% of my portfolio and I added to the position over the last 7 months. It is now around 3% of my portfolio. Many people will use Dollar Cost Averaging (DCA) when they start a new position and this makes the most sense to me. You will need to figure out what works best for you and your financial situation.
Bitcoin is here to stay. There would be a hacker uproar to anyone who attempted to take credit for the patent of cryptocurrency. And I wouldn’t want to be on the receiving end of hacker fury. — Adam Draper
Bitcoin Price Graph
SCALE 89 is a newsletter about High Growth Stocks:
Disclosure: Not Financial Advice / Not Investing Advice
James Carter, SCALE 89 & (The Author) does NOT provide financial, investment, legal or tax advice. None of my content can be construed as advice. The author is not advising you to buy or sell a security or asset. This newsletter, article and my tweets are for informational and educational purposes only. By reading my content, you are acknowledging that this is not advice. Please note that my positions can change at any time.
I currently own Bitcoin and Ethereum.My position in Crypto is around 3% of my total portfolio and this may change at any time.