Put Part of Your Nest Egg in This Asset Right Now

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Posted by The Savvy Retiree on January 4, 2021 in Investing

At the moment, the U.S. is home to about 18.6 million millionaires. If every one of those millionaires wanted to buy just one bitcoin…they couldn’t. There aren’t enough bitcoins to go around. There’s a bigger lesson there that we’ll return to in a moment.

Here in the 21st century’s third decade, we—society, writ large—sit on the cusp of one of the greatest shifts in money since the introduction of paper currency: the electronification of cash. This is real. This is huge. This is unstoppable. Even the U.S. Federal Reserve is involved. This will change how and where we save, earn, and spend. And for us Savvy Retirees, it represents an opportunity in the new year to prepare for the revolution that’s unfolding even as you read these words.

In short, 2021 is likely to be the Year of Bitcoin as more and more everyday investors and savers catch on to what, at the moment, is largely the focus of deep-pocketed smart money, and nerdly investors like me who have been part of crypto for several years (I actually built several crypto mining rigs at one point with various computer parts).

My goal today: To get you to think about putting even 1% of your wealth into bitcoin, as a measure of both financial protection and wealth creation.

Let me say that I am not a Kool Aid-drinking crypto acolyte. I am a sober-minded investor looking around at all that’s going on in the world in terms of money, security, global transaction costs, financial efficiency, governmental debt, etc. Those changes have repercussions that will play out in the movement of cryptocurrency prices.

I regularly read commentary from naysayers who spurn cryptocurrencies, bitcoin in particular, as a Ponzi scheme, a scam, a sham, a fad that, like Beanie Babies of the 1990s, will prove worthless. Their musings make clear they don’t understand crypto as a fundamental concept. I won’t bore you with the minutiae other than to say that more than a form of money, crypto is a technology upon which so many new services are being built that will fundamentally change so many aspects of life. (If you’re interested in how, I’d encourage you to read up on “decentralized finance” and the use cases for cryptocurrencies such as Chainlink and VeChain.)

Instead, I just want to focus your thoughts today on why you should have exposure to bitcoin in 2021.

Very likely bitcoin will never be anything like its fanboys first imagined—a replacement for fiat currencies. The bitcoin network doesn’t have the speed necessary for hundreds of millions of consumers to conduct transactions simultaneously around the world. Rather, bitcoin is emerging as Gold 2.0, a store of value that is portable, easily divisible, durable, fungible, acceptable for transactions globally, uniform, and in limited supply.

In short, bitcoin has all the characteristics of a dollar, and one the dollar doesn’t—limited supply.

Which brings us right back to the top of the story and those 18.6 million millionaires.

As I noted, “smart money” investors are accumulating bitcoin. Family offices that manage trillions of dollars for the uber-rich are buying bitcoin. Some of the smartest hedge fund managers are buying bitcoin. PayPal is buying bitcoin. White-shoe Wall Street investment banks are now counseling wealthy clients to add bitcoin to their portfolios.

They’re all doing this because they recognize that bitcoin is our tomorrow. The only people not getting the message: Everyday investors who don’t understand the technology, or who read lazy analysis and off-the-cuff tweets from those naysayers talking out of school.

Yes, bitcoin is a volatile asset, no question. Then again, so are many of today’s overvalued, high-profile stocks, as well as much of the U.S. treasury bond market.

I think about it this way: If millionaires, hedge funds, and family offices in the U.S. alone invested just 1% of their assets in bitcoin, that would imply something vaguely in the neighborhood of $750 billion flowing into the cryptocurrency. As I write this, all the bitcoin in the world are worth a combined $350 billion.

Now, start tossing in all the billionaires, millionaires, hedge funds, and family offices around the world, and then toss in the hundreds of millions of everyday investors like you and me who will soon realize what they’re missing out on, and toss in companies such as PayPal, Square, and a host of others that have been snapping up bitcoin…and, well, at some point we’re talking about a demand shock as all those buyers try to grab bits and pieces of bitcoin.

I’m not saying all of those people and entities will invest in bitcoin. And I’m not saying those that do will invest 1%. Rather, I’m pointing out the supply/demand imbalance that will be the cause of what I expect will be a moonshot rise in bitcoin prices.

Again, remember that only 18.6 million bitcoins exist, and that only 21 million will ever exist (the last one mined sometime around the year 2140). To meet global demand, each one of those bitcoins will be sliced and diced into small fragments to sate all the investors and savers, and each bitcoin will rise in value as that plays out.

These days, even Wall Street pros who have made billions of dollars buying and selling traditional investments are expecting bitcoin to run big. I’ve seen price targets—legitimate price targets from Wall Street heavyweights—of $100,000, $250,000, $318,000, $400,000, $500,000, and $1 million.

Per bitcoin.

I’m not saying or implying any of those targets are accurate. I’m not necessarily expecting any of those prices. But I know this without hesitation: Change is coming. Big, fundamental change.

You can listen to the naysayers who don’t understand the convergence of technology and money, and you can watch the future race past. Or you can take a moment to understand where crypto technology is going, and then stake a small bit of your wealth to bitcoin in 2021 and participate in the future in a way that could well increase that wealth noticeably.

By Jeff D. Opdyke