The 'Smart Money' Is Finally Catching Up on Bitcoin

'Start at the start'... The 'smart money' is finally catching up on bitcoin... BlackRock is intrigued... A 'stampede' into bitcoin?... The ultimate store of value... A big date is coming up for the market...

Somewhere, Satoshi Nakamoto can't believe what he's seeing...

Or maybe he can.

We've made the case here before, as well as just recently over in our colleague Steve Sjuggerud's free DailyWealth letter... The appeal of bitcoin has kept growing and growing since Satoshi Nakamoto – the presumed pseudonymous author and bitcoin creator – published his "white paper" describing the cryptocurrency more than a decade ago.

If you want to learn more about bitcoin, the eight-page paper is the place to start... and it's free to read. As venture capitalist Fred Wilson recently said on his website, it can be wise to "start at the start"...

The Bitcoin Whitepaper, originally published in October 2008, is a work of art. Eight pages long and it describes most of what we now know as the crypto sector.

There are details to understand about how coins are created and the like... But the overarching narrative of "a peer-to-peer electronic cash system" – as the white paper is titled – remains as simple as it was 12 years ago amid the financial crisis.

Whether they know it or not, people are searching for an asset that works as an alternative to the government's status quo of deflating the value of a U.S. dollar and all the consequences that come with that.

Like a mortgage crisis, for example... or any other destructive decisions driven by humans who are either in debt, or are working in ways linked to debt. (Which, I think, is all of us?)

This is one of the best charts that I (Corey McLaughlin) have come across at Stansberry Research because of how clear it is. And yet, it's also one of my least favorite charts because of the sobering message it tells us about the dollar...

Rich and poor people feel the effects of a weaker dollar... with the poor falling farther behind in the long run and the rich working to make the most of what they know about the conventional, debt-driven financial system.

Now, here comes bitcoin... a decentralized experiment that has worked so far, and is becoming more and more widely available and desired as a digital alternative to the artificially adjusted value of the dollar.

Today, bitcoin is trading at more than $19,000... It's a new multiyear high last seen during bitcoin's "bubble days" of late 2017. But unlike the quick surge higher back then, this move has been a slower climb since bitcoin bottomed near $3,000 in late 2018.

Bitcoin is starting to capture the hearts and minds of Wall Street...

And it's doing the same with other corporate decision-makers, for that matter.

We've written, most notably, about digital-payments company PayPal's (PYPL) recent foray into making cryptocurrencies available on its platform...

But the point we want to bring up today is that Wall Street firms are increasingly spending more time researching and talking about bitcoin and cryptocurrencies... and more specifically, how they may fit into the future of finance.

As Stansberry NewsWire analyst Nick Koziol reported today, bitcoin has now caught the attention of the world's largest asset manager...

Speaking at a conference with Bank of England governor Mark Carney, BlackRock (BLK) CEO Larry Fink said that the cryptocurrency has captured the "attention and imagination" of many at the firm. He added that while bitcoin is still a relatively small market, it has the potential to become a global market soon.

And he's not the only executive from the asset manager making positive comments on the cryptocurrency... Last month, BlackRock's chief investment officer for fixed income said that bitcoin is "here to stay." He added that bitcoin could even take the place of gold, as it is more "functional" than the precious metal.

And BlackRock's words carry a lot of weight. It has more than $7 trillion in assets under management. If it were to invest even a small fraction of that in bitcoin, it would make waves in the market.

Look at what happened just recently...

In the third quarter of 2020, institutional investors – the so-called Wall Street "smart money" – accounted for 81% of the $1 billion in inflows to crypto-asset manager Grayscale's products like its Bitcoin Trust (GBTC) exchange-traded fund.

As NewsWire editor and former Wall Street money manager C. Scott Garliss wrote last month, GBTC is a well-regulated exchange-traded fund that holds bitcoin, and its moves reflect bitcoin's value. From Scott's post...

You can think of it as the bitcoin equivalent of a gold-bullion fund like the SPDR Gold Shares Trust (GLD). You can buy it on over-the-counter markets through most brokerage accounts.

And just this week, asset-management firm Guggenheim Partners said it may invest in bitcoin through its "Macro Opportunities" fund.

In a filing with the U.S. Securities and Exchange Commission, Guggenheim said it could invest 10% of the fund's net asset value (more than $500 million) in bitcoin through GBTC. This is a huge deal, as Nick also reported...

If Guggenheim allocated the maximum amount allowed under the filing to the cryptocurrency, it would be investing more than $500 million in bitcoin.

The fund is based on Guggenheim's "highest conviction ideas." So including bitcoin in the fund would be a huge shot in the arm for legitimizing the cryptocurrency.

And the proof is in the buying... We've also written before about how digital-payments company Square (SQ) has made massive bets on bitcoin over the past several years...

Square has offered bitcoin trading on its Cash App since December 2017. And most important when it comes to the price action of bitcoin, the company's clients have been buying bitcoin at a pace of about 40% of all newly created coins over the past two years, according to estimates from hedge fund Pantera Capital.

Accessibility makes a big difference in the bitcoin market... And companies like Square, Wall Street firms, and new players like PayPal are making crypto more available to the masses.

Big names have been piling into the space, too. More from Nick...

Earlier this year, legendary investor Paul Tudor Jones called the cryptocurrency the best inflation hedge for 2020. And billionaire hedge fund investor Stanley Druckenmiller said he owns bitcoin for the same reason.

These two aren't the only ones to warm to the cryptocurrency in recent months. JPMorgan Chase CEO Jamie Dimon once called bitcoin a "fraud" before changing his tune.

All of this change in attitude could set up a 'stampede' of new money into bitcoin...

That's according to our colleague and Crypto Capitalist analyst Fred Marion.

It makes sense... More "traditional" asset managers buying bitcoin legitimizes the cryptocurrency for investors who aren't sold on it.

And if asset managers like BlackRock and Guggenheim are offering bitcoin, it's an indication that they view the cryptocurrency as a real store of value.

That's precisely what our Director of Research Austin Root – a self-admitted bitcoin skeptic – believes. As he wrote in DailyWealth last week in an even-headed analysis of bitcoin's place in our world...

Today, the global economy is in a recession. Central banks around the world are printing trillions of dollars of paper currencies. Debt levels are soaring. And the yields on those government debts have fallen to near zero, even going negative in many countries.

So with government bonds no longer providing any real rate of return, investors have been searching for other stores of value.

Gold has been a precious, durable, and trusted store of value for centuries. And in a world where bonds provide no yield – and where it's easy to print a near-limitless supply of new dollars but difficult to produce new nuggets of gold – the precious metal should really flourish.

But here's something that might surprise you... Bitcoin will likely do even better over the long run.

Don't get us wrong, we like gold... And Gold Stock Analyst editor John Doody sees higher highs ahead for the precious metal – topping $3,000, perhaps – for a lot of the same money-printing reasons that Austin talked about in his DailyWealth essay.

But we like bitcoin, too...

As Austin continued, just like gold, he thinks bitcoin is precious (given its capped supply of 21 million, designed by Satoshi). It's also durable, and it's becoming increasingly more trusted. More from the November 25 DailyWealth...

Thus, I can see bitcoin becoming for millionaires what fine art has become for billionaires – when they aren't making any more, only those who are willing to pay higher and higher prices will be able to buy and own a real Picasso or Matisse (or bitcoin) for themselves.

I remain doubtful that bitcoin will completely upend financial markets and become the medium for all major financial transactions the way that some bulls believe...

Governments want to control those types of exchanges, after all. And giant financial firms like Visa and Mastercard have already built payment networks that are ubiquitous, trusted, and near-universally adopted.

But to be an incredibly desirable and portfolio-enhancing asset, bitcoin doesn't have to fulfill that promise. Instead, it need only fulfill its inevitable use case as a digital store of value.

And in a post-pandemic world where government stimulus debases currencies and government bonds yield zero or even negative rates, I believe bitcoin will prove to be the ultimate store of value among all assets... digital, precious metals, or otherwise.

If you ask us, Federal Reserve Chair Jerome Powell's largely underreported public comments in October (not by us, though) about the place of potential central-bank digital currencies ("CBDCs") in the world appear to have opened the eyes of institutional folks to the possibilities...

We're glad they're catching up... Not only are we happy for philosophical reasons, but we also have an entire research service dedicated to cryptocurrencies.

Edited by Eric Wade, its history of making money for subscribers in this little-known corner of the market goes back more than two years. If you don't already subscribe, you can learn more here – and hear from Eric – during Porter's recent "Capitalism in Crisis" presentation.

One of the things we love about Eric's work is that it allows investors to get ahead of Wall Street. Crypto Capital subscribers can enjoy the biggest upside possible before "everyone else" piles in, or even knows about some of the smaller cryptos that Eric and Fred research.

For instance, Crypto Capital subscribers are sitting on a 400%-plus return on bitcoin and 500%-plus in fellow cryptocurrency Ethereum in just two years. Plus, 10 other positions are up triple-digits today.

(On a related note, attendees of our "virtual" Stansberry Conference and Alliance Meeting in October are already up 100% in a related play from our "value" panel, based on bitcoin's surge in price alone.)

Before we go any further, please remember that we don't suggest putting a large portion of your portfolio into any cryptocurrency... Eric is the first to say that. If you're just getting started, start small. But bitcoin and cryptos do have a place in any investor's portfolio.

Now that we think about it, Eric is the guy who used to own WallStreet.com. He bought the domain name for $7 and sold it for more than $1 million a few years later in 1999.

We don't think it's a coincidence that Eric is now "all in" on bitcoin and cryptocurrencies, as he wrote about last weekend in our Masters Series... and that only now is Wall Street catching up.

Switching gears to another 'big picture' topic...

Two things can be, and often are, true at the same time... as much it feels like they can't be.

Gold and bitcoin can both work as inflation hedges. Or said another way, the anecdotal and the analytical can match up... and we might just be coming up on one of those moments.

Let me explain...

If you've followed along with us this year, you know we've shared the brand of technical analysis that Ten Stock Trader editor Greg Diamond uses every single day to make decisions about whether to buy stocks, sell them, or stay put and do nothing.

No matter what, Greg is always telling subscribers what can happen based on proven patterns that he has seen in the markets over time. He's not predicting what will happen – that's a big difference.

These indicators – like "support" or "resistance" levels – have proven to be measurable markers of supply and demand of a particular stock, sector, or asset over time.

Greg doesn't trade bitcoin in his service, for example... But he was able to apply these same principles to the cryptocurrency, as we shared last week in the Digest. And as we wrote back in the June 10 Digest, for example...

When former "resistance" levels – more sellers than buyers – turn into support over time, that's a good signal of an uptrend in whatever index, stock, or asset you're looking at.

In other words, using technical analysis gives investors a reliable way to take into account the unexpected or predictable unpredictability of Mr. Market.

If that sounds refreshing to you, we urge you to check out what Greg is saying today...

In short, he believes a big moment for the stock market's direction will likely occur within the next few weeks. And Greg is so confident, he's pinpointing a specific day...

Wednesday, December 23.

It could be coincidence – and we haven't talked to Greg about this because it doesn't even really matter – but that's the day when state electors' votes for president and each state's certified election results are supposed to be delivered to Congress...

And the way the drugmakers are talking, that could also be around the time we hear the next big news on the vaccine front. (We can't imagine many drugmakers want to be working the week between Christmas and New Year's Day to meet their "end of the year" promise.)

In any case, this is the point... The headlines – for traders and investors, at least – might be secondary to what actually happens to the big money sloshing around the stock market on December 23...

I know it might sound too good to be true... That's why Greg put together a special free report that he's getting ready to e-mail to subscribers tomorrow with all the details about how he can say this with such certainty.

He used this same method to warn subscribers about something big happening in the markets back in March... and he used the same signal to make $4.6 million on one trade back in his hedge-fund days before joining us at Stansberry Research.

If you're interested in making short-term trades in particular, this is a no-brainer. But it's great information for any investor, so you don't wake up one morning totally shocked about a big market move.

Click here now to sign up and get this free report from Greg tomorrow.

The Question Nobody's Asking About 'the Vaccine'

Stansberry Venture Technology editor Dave Lashmet joins Jessica Stone to dig into the details you need to know before taking one of the COVID-19 vaccines... The biggest open question, Dave says, is one we haven't heard much about: What are the side effects?

Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and don't forget to follow us on Facebook, Instagram, LinkedIn, and Twitter.

New 52-week highs (as of 12/2/20): AbbVie (ABBV), Altius Minerals (ALS.TO), Morgan Stanley China A Share Fund (CAF), Richemont (CFRUY), Crispr Therapeutics (CRSP), Curaleaf (CURLF), Disney (DIS), FedEx (FDX), Alphabet (GOOGL), Jushi (JUSHF), KraneShares Bosera MSCI China A Fund (KBA), KraneShares CICC China Leaders 100 Index Fund (KFYP), Intellia Therapeutics (NTLA), Starbucks (SBUX), Silvergate Capital (SI), Spotify Technology (SPOT), ProShares Ultra S&P 500 Fund (SSO), Take-Two Interactive Software (TTWO), ProShares Ultra Semiconductors Fund (USD), Vanguard S&P 500 Fund (VOO), and Zymeworks (ZYME).

In today's mailbag, feedback on yesterday's Digest that looked at the return of Janet Yellen to our lives. Do you have a comment or question? As always, send us an e-mail at feedback@stansberryresearch.com.

"I find it fascinating, that just like most Christians do not adhere to the teachings they supposedly believe, most Keynesians behave similarly.

"Keynes suggested recessions could be caused by a decline in aggregate demand, and that government stimulus of demand might shorten a demand-led recession.

"Modern Keynesians mistakenly 'believe' all recessions are demand led and that only government policy can cure a recession.

"Factual analysis has been replaced by fanatical belief, along with a bunch of partial derivatives to obscure that delusional belief.

"And, pray-tell, is our current virus led recession demand-led? Or is it supply-led as production is shut down under the edict of government or the high unit cost of partial operation?

"Duh!!

"And did Keynes address supply-led recessions? No! Supply-led recessions are correctly addressed by neo-classical economics, not Keynesian economics. And supply-side recessions are not 'cured' by 'demand-side management.'

"Thanks to totally inappropriate (as usual) Monetary Policy, the economy is in a liquidity trap... so the monetary portion of Keynesian policy believers is kaput.

"That leaves the Keynesian believers with only some form of government fiscal spending combined with deficit financing.

"What Keynesian 'believers' conveniently forget and MMT pariahs conveniently ignore is that deficits must be funded by the private sector purchase of government bonds in order to temporarily absorb the private sector 'excess liquidity/savings.' And as Keynes clearly and distinctly proffered, the government must subsequently run a surplus to liquidate that bond financed debt. In part that is why economists who label themselves Keynesians, are not true adherents to Keynesian theory, or the facts.

"Most modern Keynesians simply ignore government debt (roll it over) or worse, as with MMT believers, suggest that you can simply print money to liquidate government debt. Quite clearly they have apparently no conception (or at least no concern) for the consequences of the repudiation of money and the coincident economic collapse.

"Clearly the only reason that modern Keynesians and MMT fanatics ply their beliefs (it is welcome music to the tone deaf politicians) must be because they hope economic Armageddon will happen after their watch and therefore it won't be their problem... How evil!" – Paid-up subscriber Kendrick M.

"I'm just sitting here chuckling to myself as you write about Joe Biden's pick for secretary of the treasury Janet Yellen. Because in about 2 weeks from now Trump will be declared the winner of the 2020 election. Biden LOST by a landslide and Trump WON by a landslide. But OK, it's just a few weeks away. I did take your advice on some investments and have done well so far. But the politics aren't going to play out with a Biden presidency. Just my 2 cents worth." – Paid-up subscriber Kelly O.

Corey McLaughlin comment: As we've said before, no matter who sits behind the big desk in the Oval Office, the "easy money" monetary policies will continue... and it will be "for the foreseeable future," as the Federal Reserve has repeatedly said.

When it comes to additional fiscal policy happening, it's just a matter of...

1. How much?
2. How soon?
3. And what type?

That does all depend on who is in the White House, Congress, and heading the Treasury.

Either way, though, the idea we wrote about yesterday about this all being more fuel for our colleague Steve Sjuggerud's "Melt Up" thesis doesn't change.

All the best,

Corey McLaughlin
Baltimore, Maryland
December 3, 2020