Crypto Expert Reveals Why Bitcoin Prices Are About to Take Off
Editor's note: Early investors in bitcoin and other cryptocurrencies have made a fortune.
Even folks who bought bitcoin just two years ago are up as much as 2,000%... enough to turn every $5,000 into more than $105,000.
But you still have to do your diligence when it comes to the crypto market.
In today's Masters Series, we're concluding our exclusive interview with Crypto Capital editor Tama Churchouse. In the final installment, Tama discusses the asset's volatility... the sector's tailwinds... and how to buy your first bitcoin...
Crypto Expert Reveals Why Bitcoin Prices Are About to Take Off
An interview with Tama Churchouse, editor, Stansberry Churchouse Research
Sam Latter: It seems like every day, bitcoin prices swing around like crazy. Over a two-week period in September, it fell from $4,950 to $3,200 before reversing and ripping higher to $5,800 earlier this month. This kind of volatility is sure to scare off investors...
Tama Churchouse: You're right. Most people look at bitcoin's daily price changes and write it off simply because it's more volatile than a slow-moving blue-chip stock. But these swings will shrink in size as more and more people move money into bitcoin.
That might sound hard to believe, given the numbers you just quoted. But consider this: Data from investment-management firm ARK Invest showed that bitcoin's daily volatility has fallen 80% from where it was five years ago. And volatility is even down nearly 30% since the beginning of 2016 alone.
That said, even with this level of volatility, bitcoin has delivered better risk-adjusted returns than stocks, bonds, gold, and real estate over the past five years. In fact, over the past year alone, bitcoin doubled the performance of stocks on a risk-adjusted basis.
Of course, bitcoin will be volatile. Like any asset, cryptocurrencies will continue to experience rallies and corrections. It can't simply go up in a straight line forever, and as we've talked about, it could absolutely be in the middle of a short-term bubble in prices. But over the long term, the upside potential is tremendous. You just need to be careful and make sure not to put in more money than you can comfortably risk losing.
Sam: What are some catalysts that suggest cryptocurrency prices are headed higher?
Tama: For one, the demand in Asia is absolutely off the charts. I've told my readers it's the epicenter of the global cryptocurrency boom.
Cryptocurrency exchanges in South Korea, China, and Hong Kong do much more volume than the U.S. Meanwhile, Asian governments on the whole have been very open-minded in their attitudes toward cryptocurrencies. As I mentioned before, Japan began recognizing bitcoin as a legal method of payment back in April. And South Korea is the hotbed for crypto exchange activity right now.
China is in the process of regulating its domestic crypto industry. The details aren't there yet, but like I said, it's just a matter of time. I'm hearing chatter that we'll see some of those announcements take place shortly after the National People's Congress in the spring. That might mean crypto is more "controlled," but regulatory validation is a good thing, not a bad thing.
And there's still the possibility that bitcoin could be introduced as an exchange-traded fund (ETF). The U.S. Securities and Exchange Commission (SEC) knocked that idea down six months ago, but every day that bitcoin becomes more popular as an alternative asset class, it becomes harder to see why the SEC wouldn't accept it. It also makes sense because it would bring a lot of bitcoin ownership directly into the U.S. government's regulatory oversight.
A bitcoin ETF could easily trigger billions of investment dollars into the space. And remember, ETFs aren't just for retail investors. They also give "validation" to the hundreds of billions of dollars of global institutional money sitting on the sidelines.
Sam: OK, you've convinced me. I'm ready to buy. How do I go about getting started investing with cryptocurrencies? I know I can't just go to my brokerage account and type in bitcoin.
Tama: No, it's not that easy. And that's a good thing for security purposes.
You need two things to start trading virtual currency: an "on ramp" and a wallet. An on-ramp is a website where you can convert fiat money like U.S. dollars into bitcoin. Gemini and Coinbase are two of the popular choices.
You simply create an account, go through a secure verification process, deposit money from your bank account, and buy bitcoin.
But it's important not to keep too much money in those exchange accounts. These exchanges can and have gotten hacked in the past, although Gemini and Coinbase are much safer than some of the other crypto exchanges that don't deal with fiat currency.
Gemini, for example, was the first U.S. exchange licensed for bitcoin and ethereum trading. It's regulated as a trust company by the New York State Department of Financial Services (NYSDFS). That means Gemini has fiduciary obligations to you as an investor, and your deposits are held at FDIC-insured banks.
For the most part, though, you should keep your money in your bitcoin wallet. I personally like using Trezor, a hardware wallet used to store bitcoin offline. You can buy one on Amazon for about $100.
If you want to store your bitcoin on a computer, I prefer Exodus, Jaxx, or Electrum. And if you want to store your bitcoin with a web wallet, consider a Blockchain.info wallet for ease of use... Although I don't recommend that for substantial amounts of money.
I've put together a comprehensive special report for subscribers walking them through the process step by step. But that's the basics to buying bitcoin.
Sam: Do you have any advice for people looking to buy their first bitcoin or invest in cryptos for the first time?
Tama: Yes. I have three simple pieces of advice for people like this.
First, you must start small. I cannot emphasize this enough. Don't put your rent money into your bitcoin account. You can buy fractions of a bitcoin, so you don't have to invest $50,000 right off the bat.
Buying, moving, and storing bitcoin is much different from traditional online banking or investing. For example, if you send bitcoins to the wrong address, you can't call up your bank and cancel your transaction. It's gone. That's it. So it's critical to familiarize yourself with the mechanics of buying and moving bitcoin with a small amount of money.
My second piece of advice might sound a bit ironic or counterintuitive: Write everything down. At the very least, keep totally secure digital records. Even though bitcoin is on the cutting edge of technology, I make sure to keep records of all of my bitcoin account information – my passwords, private keys, and recovery backup phrases – offline. You can use pen and paper if need be.
Your wallet has a public key. Think of this as your account username. It's where the bitcoins get sent. Your wallet also has a private key, which is essentially the password you use to access your wallet. Again, this is different from online banking or investing... There is no "forgot my password" option. If you lose or forget your private key, you lose access to your wallet and investments. It's gone. That's why I keep emphasizing that you have to be careful.
Finally, as I mentioned, you shouldn't leave your money at the exchange. The process of opening an account with an exchange takes a few days as the company verifies your identity. Once you're cleared, you'll be able to fund your account with a bank transfer or credit card before you buy bitcoin.
Keep your money in a bitcoin wallet of some kind. If you control the private keys to your wallet, you control your bitcoin. If it's with an exchange, that means the bitcoin is out of your wallet... and out of your control.
Sam: Thanks so much for taking the time to speak with us today.
Tama: It's my pleasure. Thanks for having me.
Editor's note: A powerful and exclusive group called "The Bitcoin 1%" is closed to normal, everyday investors... And you'll never hear about it in the mainstream media. But Tama just put together a brand-new presentation explaining how this "secret society" is responsible for a little-known technique that could make you a fortune in the cryptocurrency market. Get the details here.