A 'Breathtaking' Bitcoin Rally Could Be Coming

Bitcoin trades near $55,000 once again... 'Ban' worries have cooled... A market cap above $1 trillion... Is this a repeat of 2016?... A 'breathtaking' bitcoin rally could be coming... A special offer for Eric Wade's Crypto Capital...

Have you noticed? The price of bitcoin has jumped back above $50,000...

And, surprisingly, owners of the world's first and most popular cryptocurrency have the government to thank...

Testifying before the House of Representatives yesterday, Securities and Exchange Commission ("SEC") Chair Gary Gensler said that the regulatory agency was not looking to ban the use of bitcoin.

This follows similar recent commentary from the Federal Reserve. Last week, Fed Chair Jerome Powell said the central bank would not ban cryptocurrencies in the U.S.

These comments – by two of the most notable figures in the U.S. financial system – are taking away some uncertainty around the regulatory landscape for bitcoin and other cryptocurrencies.

The worst-case scenario for many U.S. crypto bulls was a full-scale ban, like we recently saw in China – news that helped cut bitcoin's price in half earlier this year.

Over the past few months, China has taken an extremely hard-line stance on cryptocurrencies. First, it banned crypto mining within the country's borders. Then, last month, the People's Bank of China banned all crypto-related activities.

But Gensler and Powell, just days apart, have ruled that possibility out within U.S. borders... for now, at least. However, Gensler pointed out, if any U.S. government body had the authority to "ban" bitcoin, it would be Congress.

In any case, bitcoin jumped higher on Gensler's testimony to above $50,000 – its highest level since May. The cryptocurrency has now nearly doubled from its July lows, and today trades near $55,000.

It's up 33% in just over a week...

And as I (Corey McLaughlin) and others will explain today, the price of bitcoin – which signals enthusiasm for the crypto space in general – could be headed much higher in the near future...

Generally speaking, we are hearing a softer tone from the U.S. government on cryptocurrencies...

The Fed, the SEC, and some members of Congress, who have oversight over the bank and the regulatory agency, have been critical about digital assets in the past.

In fact, in July, we raised an eyebrow when the Senate Committee on Banking, Housing, and Urban Affairs held a session skeptically titled "Cryptocurrencies: What Are They Good For?"

In the September 15 Digest, we noted that the SEC was looking at regulating cryptos... And our colleague and Crypto Capital editor Eric Wade explained some of the SEC's criticisms in a weekly update to his subscribers last month as well...

This week, U.S. Securities and Exchange Commission ("SEC") Chair Gary Gensler testified that he thinks most cryptos are law-breaking, unregistered securities that the SEC might go after.

That stance made it seem like a huge crackdown on crypto could be coming. But in these recent discussions on Capitol Hill, we also noticed a softer tone emerging – from "What are they good for?" to "What should be regulated?" (like stablecoins). This seemed to move away from any talk of an all-out ban.

A clearer yet still broad-brush regulatory stance from Gensler and Powell, two important figures in the "system," is serving as a relief to crypto investors right now.

We can see a bullish trend in crypto fund flows lately...

According to a weekly report from digital asset manager CoinShares, $90 million flowed into digital asset products in the week ending October 1... That marked the seventh straight week of inflows for crypto investment products, the company said.

That brings the total inflows into crypto products in 2021 to more than $6 billion.

CoinShares said the trend of inflows shows that investor confidence in cryptocurrency is gaining steam. Specifically, it cited these "accommodative statements" from the SEC and Fed.

With the current Fed and SEC leaders saying they won't ban cryptos, formerly reluctant businesses and investors can begin to wade into the space without fear of a massive crackdown.

That means the increased adoption we've seen – with massive companies like Amazon (AMZN), Apple (AAPL), and Walmart (WMT) all joining the fray – should continue to grow.

More and more banks and payment companies are 'greenlighting' cryptos too...

On Tuesday morning, U.S. Bank (USB) announced that it would begin offering bitcoin custody services to its clients in the U.S. And it said it will roll out additional cryptocurrency services in the near future.

Essentially, "custodian" services means that USB customers can buy bitcoin, then safely store it with the bank.

Also yesterday, Bank of America (BAC) – the nation's second-largest bank – announced the launch of a "digital assets" research arm with the publication of a report, "Digital Assets Primer: Only the First Inning."

The sector is now "too large to ignore," a group of Bank of America analysts wrote in a research note...

Yes, yes it is... Welcome to the crypto show, guys.

Bitcoin's market cap is more than $1 trillion today...

That's larger than all but these four publicly traded companies – Apple, Amazon, Microsoft (MSFT), and Alphabet (GOOGL).

And bitcoin's market cap is larger than the combined market cap of traditional banks like JPMorgan Chase (JPM), Bank of America, and U.S. Bank... and the combined market cap of credit-card companies Visa (V), Mastercard (MA), and American Express (AXP).

We hesitate to make these sorts of market-cap comparisons because the valuations can change quickly based on the market's daily movement. But for now, it's true... and shows you something about the scale of the crypto space and how quickly it has grown the last few years.

At the same time, if you think you missed out on the opportunity to get into cryptos, we'll end today by telling you why that's not the case... You can still get into bitcoin, the most popular name in the space today, and an entire universe of "digital assets" that are changing the financial system.

First things first: where bitcoin's price could go next...

If you are a believer in a mix of fundamentals, technical indicators, and circumstantial evidence playing a strong role in any market, there is a compelling case to be made for a big move higher in bitcoin's price...

According to Eric, the stars could be aligning for a "breathtaking" move. He explained this in his latest Crypto Capital weekly video update on Friday...

From a fundamental view, one of the special features of bitcoin is its capped supply (21 million coins) and the inflation-proofing that is baked into its computer code.

Roughly every four years – the time it takes for 210,000 "blocks" in the bitcoin blockchain to be created by a network of computer users – the number of bitcoins rewarded to a "miner" is halved.

Let me explain... In 2009, the reward for each "block" created by a miner was 50 bitcoins. Today – after three halvings, the latest in May 2020 – the reward is 6.25 bitcoins. It also costs energy and time to create the bitcoin.

You might think this lower reward would cause miners to stop putting in the effort to mine bitcoin... and for some, it might. But, on balance, quitting the bitcoin game has not been worth it...

Bitcoin miners are making $40 million per day, according to blockchain analytics firm Glassnode. That's a 488% increase since the bitcoin network's halving in May 2020.

In theory, lower bitcoin supply with every coin created, combined with higher demand, should lead to a higher bitcoin price – and that's exactly what has happened. Supply-and-demand theory has met reality.

Bitcoin's price has moved high enough that miners still think it's worth creating it... So on the cycle goes.

Before the 2020 halving, the previous one happened in 2016...

This is where we pick up with Eric's analysis.

In his weekly update video on Friday, he brought up a 2016 article from Forbes, when the headlines were largely similar to what they are today – focused on the nation's massive debt and the U.S. debt ceiling. Eric shared it with viewers...

The national debt will break $20 trillion before the end of 2016. The budget deficit was not that large, but the government borrowed extra to catch up after the last debt ceiling showdown... Is this a broken record?

As Eric said in his update... yes, it is. Today, as we've written for several weeks and months, the debt ceiling "debate" is coming down the wire again, headlined by mostly political posturing.

But the point and the timing might be too similar to ignore, Eric says... It might indicate something about "patient" bitcoin investors who have looked at the cryptocurrency as an alternative to the "system" for years now – and what they've seen over that time.

If you look at bitcoin's price performance over the 336 days following the bitcoin halving of July 9, 2016, you'll see it gained 300%... then traded sideways for a bit before hitting a euphoric peak near $20,000 at the end of 2017.

Start to finish, that made for a rally of nearly 3,000% in the 525 days after the 2016 bitcoin halving.

Today's bitcoin chart looks 'remarkably similar,' Eric says...

After bitcoin's most recent halving on May 11, 2020, its price gained 550% over the next 336 days to its most recent peak above $60,000 in April. As Eric put it...

If you were someone who's looking for large trends, four-year cycles, anything that repeats itself, any reason at all to be comfortable and familiar, you might add these two things together.

Today, we're 513 days from bitcoin's 2020 halving. If this pattern holds, 525 days post-halving would arrive in just two weeks... And we're nowhere near the thousands-of-percent gains that occurred after the last halving cycle, Eric points out...

If cryptos, bitcoin specifically, repeat themselves like what happened in 2016 and 2017, any day now, we should see a breathtaking rally take place... It would be almost straight up with some bumps in it.

Of course, a 550% rally in 2020 and 2021 is steeper than a 300% one in 2016 and 2017. So it might just be taking longer to digest the enthusiasm (i.e., the Elon Musk show) of the early cycle gains before liftoff again...

If investors are looking at this thinking, If we're repeating our debt ceiling debt cycle – $20 trillion, $30 trillion – maybe I'm willing to take the risk argument for repeating a massive rally in bitcoin as well. And then other cryptos will follow, including possibly Ethereum and other cryptos behind that.

This is the balancing act... that the crypto market is looking at. That they're looking at all of this and saying, "I'm willing to be patient in here because if we get a rally, it's going to be breathtaking. It's going to be phenomenal."

Like we said, it's a compelling case...

As we wrote, bitcoin is up 33% in a little over a week...

And Eric says the gains from the next bitcoin rally could reach anywhere from 4 times to 10 times bitcoin's current price – though those rewards don't come without their risks. There is no guarantee this rally happens, for one thing...

If you own cryptos in your portfolio right now, especially bitcoin, it's probably a good idea to keep holding and be rewarded for your patience. But if you're a new investor thinking about going "all in" on bitcoin today, hold your horses and think for a moment...

As Eric put it...

You don't need to have all of your money at risk to participate in upside if cryptos are going to triple or quadruple or 10X in value from here. The answer is not to put everything in. The answer is to manage your risk.

In other words, don't put in any new money that you can't afford to be without. And follow a trusted guide who can give you vetted advice on bitcoin and the various cryptos.

Sell-offs happen, just like rallies. And drops in bitcoin's price have proven to come as quickly as the rallies. You don't want to be completely wiped out in the case of the former, no matter how compelling a bullish case for bitcoin – or any other asset – might sound.

At the same time, if your financial house is in order, you might want to allow yourself to take more risk and take advantage of great opportunities.

You won't find anyone better than Eric Wade to guide you through the crypto world...

We read the newsletters and have seen feedback from hundreds of subscribers who have said as much.

In his Crypto Capital newsletter, Eric and his research team send subscribers weekly updates like the one we referenced today. They also recommend a portfolio of more than two dozen long-term plays and "blue chip" cryptos, along with detailed monthly issues.

The full-model portfolio currently has seven positions sitting on gains of at least 1,000% – and 11 others in triple digits... And not only does Eric know how to pick the cryptos that have best potential for massive returns, but he also shows subscribers exactly how to buy them.

In addition to the monthly and weekly updates and portfolio picks, you'll find a special report available to subscribers, "How to Buy Your First Bitcoin"... research on interest-earning stablecoins... and an all-new report from analyst Stephen Wooldridge II, "Everything You Need to Know About Gas Fees."

Existing subscribers and Alliance members can check out Stephen's report here, published last week.

For anyone else, in part because of the opportunity we see in cryptos today, we've arranged a special offer for you to subscribe to Crypto Capital. Right now, you can get 50% off the regular subscription price for one full year. Click here for more details.

This 'Shark' Owns More Crypto Than Gold

Shark Tank star Kevin O'Leary, also known as "Mr. Wonderful," says he doesn't "see a situation where crypto is ever going away." He tells our editor-at-large Daniela Cambone that he now holds more cryptocurrency assets than gold and explains why he recently became involved in decentralized finance projects...

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 10/5/21): Continental Resources (CLR), Freehold Royalties (FRU.TO), JPMorgan Chase (JPM), Mosaic (MOS), Royal Dutch Shell (RDS-B), VanEck Vectors Russia Fund (RSX), Telekomunikasi Indonesia (TLK), United States Commodity Index Fund (USCI), and Viper Energy Partners (VNOM).

A quiet mailbag today. Share your thoughts on bitcoin and other cryptocurrencies. We'd love to hear them. E-mail us at feedback@stansberryresearch.com.

All the best,

Corey McLaughlin with Nick Koziol
Baltimore, Maryland
October 6, 2021