The 'Bad News' About Bitcoin Is Actually Good

China's bitcoin 'ban' threat becomes reality... Eric Wade is 'deliriously happy'... Up 200% with the worst news you can think of... The 'bad news' about bitcoin is actually good... Janet Yellen just basically guaranteed inflation... Doc's retirement 'wake-up call' is a must-see...

What in the world is going on with bitcoin?

The last time we wrote to you about bitcoin in any depth, in the June 3 Digest, the world's most popular cryptocurrency traded for around $39,000... That was down almost 40% from its most recent high of nearly $65,000 in April.

At the time, more evidence of China's desire to "ban" bitcoin in the country was credited as the culprit for the sell-off (along with some typical Elon Musk nonsense).

Three weeks later, the price of bitcoin is not much lower – around $35,000 as we write – but it fell to less than $30,000 earlier this week... That's a 50%-plus drop from the April high.

Again, this recent sell-off happened in response to reports that the Chinese government has ordered cryptocurrency "miners" in the country to shut down, as well as other crackdown-type directives...

For instance, the People's Bank of China said that it asked digital-payments company Alipay – one that has close connections to the Chinese government – to not provide crypto trading services.

Long story short, China clearly isn't on board with bitcoin...

Or more broadly, we should say that the country's communist leaders aren't bullish on "free" decentralized cryptos. This takeaway shouldn't be surprising to anyone, especially our longtime Digest readers and Crypto Capital editor Eric Wade's subscribers...

We've noted before that the Chinese government actually sees the value in blockchain technology – for the government's own use – but not for everyday people... Officials have talked about a ban for nearly a decade, and it looks like they mean business now.

In any case, it appears to us that an entirely new set of bitcoin owners have gotten spooked... especially the millions involved in China who don't want to face consequences of partaking in cryptos anymore.

We know many of you bought bitcoin long ago, when it traded for less than its current price... So you're probably still sitting on healthy gains today. But with everything that has happened with bitcoin and cryptos over the past few weeks, we know many of you likely have questions...

So we checked in with Eric today to give Digest readers his take on what's going on...

This might surprise you, but Eric told us in a private note that he is 'deliriously happy'...

As he wrote to us...

We should be delirious with this multiple-choice market giving us what appears to be "D – all of the above" when we're trying to decide what to worry about now. Deliriously happy, that is.

For a decade, we've worried about China turning off bitcoin or even attempting to shut it down. It finally happened, and it looks like this one will stick. So sure, bitcoin and cryptocurrencies have had a week to sort out what the landscape looks like with roughly 1 billion fewer potential customers.

That obviously spooked enough people – even the ones who are comfortable with bitcoin's legendary 30% and 40% corrections – that we've seen rally after rally fail... And some folks even see this 50%-plus correction as the beginning of the most rapidly realized bear market ever.

Eric mentioned a few important details that likely contributed to the sell-off...

First, he says the practical matter of miners located in China being forced to turn their gear off temporarily weakens bitcoin's security, which historically coincides with lower prices. A lower bitcoin "hashrate" also typically means lower prices.

Plus, there have been rumblings from the U.S. government "about cryptocurrencies single-handedly taking our civilized society back to the Wild West," Eric says... But to be clear, he doesn't believe a China-style ban can or will happen in the U.S.

In fact, Eric said he's probably more bullish today on bitcoin now that China's longtime threats have come to fruition. More from Eric's note...

What is there to be happy about – let alone deliriously happy? Well, because when the issues that you worry about finally come to pass and you have to deal with them, you can work your way through them.

Today, it's looking like bitcoin is "pricing in" all the worst news anyone can think of. And not only is bitcoin fighting back to hold onto 200% gains over the past year... But the cryptocurrency market is resiliently staying above $1 trillion in market cap.

And every free-thinking person on the planet – thanks to China's recent moves to limit their citizens' access to cryptocurrencies – gets to see the reality (not just theory) of what happens when a government restricts its people's freedoms.

So yes, there are a lot of reasons crypto prices are dropping... and most of them we've been predicting for years, Eric says. Now, we're getting a chance to sort through them and look back to the future with fewer threats, not more.

Said another way...

This is one of those situations where 'bad news' can be good news for educated investors...

We're reminded of what our colleague Dan Ferris wrote in the May 28 Digest...

He pointed out that a 50% sell-off in "traditional" assets like stocks or bonds would very likely lead to mania, panic, and terrible consequences. Yet when it just happened to bitcoin, Dan noted...

No large financial institutions failed. The Federal Reserve didn't have to bail anyone out. No catastrophic wave of margin calls occurred. No industry collapsed. No mass layoffs were announced.

Dozens of books will not be written, and movies will not be made about bitcoin's 54% plunge in a little more than a month. It won't change the course of history or terrify bankers from lending for a decade...

A major – albeit very new – asset class lost more than $1 trillion in value in less than two weeks, and it wasn't really a big deal.

The speculators took a licking... and the system just kept on ticking.

That refers more to the fundamental outlook for bitcoin, which Eric also talked to us mostly about today. But at the moment, there is a bullish "technical" outlook as well (meaning technical price indicators, not the technology behind bitcoin itself)...

We saw a lot of worries earlier this week about a so-called "death cross" in bitcoin's technical price picture... That simply means the crypto's shorter-term, 50-day moving average dipped below its longer-term, 200-day moving average.

Some market observers consider this a sign of more bad things to come... Such moves happened before big traditional stock market crashes in 1929, 1938, 1974, and 2008. But they aren't that rare and have happened prior to plenty of other market behaviors, too.

When it comes to bitcoin, if you believe in using recent history as an indicator, a "death cross" could actually be a bullish sign in the short term... One-week historic returns after such moves in bitcoin's history are positive, with a 2.5% average gain.

In the longer term, the results are a bit more inconclusive depending on what timeline you want to use. But the last instance was certainly bullish...

You see, the last "death cross" for bitcoin occurred in March 2020 after it had plunged nearly 60% in six days... And of course, that's right before it started an epic rally of more than 1,000% over the next year.

This crossover briefly happened over the weekend, but it already hasn't lasted... Bitcoin has since rebounded roughly 20% since this week's big sell-off.

Here's another key 'bad news is good news' sign...

According to Ten Stock Trader editor Greg Diamond, a chartered market technician, bitcoin may have hit a bottom this week...

To Greg, the latest bitcoin sell-off looked like a clear-cut, final fifth leg down of an "Elliott Wave" pattern that started in April after bitcoin went to nearly $65,000.

We won't get into all the details about Elliott Wave analysis here (check out Greg's work for more on that)... But in short, Greg told his subscribers on Tuesday that bitcoin's most recent sell-off behavior "almost always marks a significant reversal."

If you're a Crypto Capital subscriber, I urge you to stay tuned to your inbox for your regular weekly update from Eric tomorrow. And if you're not a subscriber, click here to learn more on how to get started today.

Moving on, we must mention some recent startling comments – even if they're likely just public posturing...

The only direction for our collective debt to go is up... so says U.S. Treasury Secretary Janet Yellen.

As Stansberry NewsWire editor C. Scott Garliss reported this morning in his daily market preview...

Yellen told a Senate panel the U.S. could run out of money in August to meet the government's obligations, unless it suspends or raises the debt ceiling.

That sounds downright scary – and it is.

Yellen is talking in public about the U.S. – the largest economy in the world – conceivably needing to default on its $28 trillion of debt in a matter of months unless the "debt ceiling" – government spending – doesn't keep going higher.

She's right, in a sense... The "ceiling" has been raised by Congress roughly 90 times since 1940. More debt leading to more debt has been the practical answer that people of various political views have seemed to agree on over the years.

And this topic is coming up now because a deadline is looming... Most recently, the debt ceiling was raised or suspended several times under former President Donald Trump – including an August 2019 suspension that's set to expire on July 31.

Scott believes Yellen's comments are likely more of a negotiating tactic than anything in the debate about a new budget for 2022 and the infrastructure ideas being batted around in Washington, D.C. today. As Scott told us in a private note earlier today...

To me, that says everyone's going to have to give ground on the proposed infrastructure spending proposals. The odds of something getting done on the lower side of the possibilities just went up.

Scott suspects Democrats and Republicans will at least agree on spending more money in the years ahead. What to spend it on exactly is another debate entirely, though. As he reminded us...

Everybody in Washington has an agenda. And all of their special interests come at some sort of cost.

This item reminds us of some of legendary investor Warren Buffett's wisdom...

The Oracle of Omaha said it just last year at Berkshire Hathaway's (BRK-B) annual shareholder meeting...

He believes the U.S. could never default on its debt because it can continue to simply print more money, or bonds, in its own currency – which other countries don't do.

This is a prevailing thought among supporters of Modern Monetary Theory ("MMT), which is driving a lot of today's fiscal and monetary policy. But Buffett also said there will be a consequence of endless money-printing, one that we've talked a lot about lately – inflation. From Buffett's address at the Berkshire Hathaway meeting...

If you print bonds in your own currency, what happens to the currency will be the question... What you end up getting in terms of purchasing power can be in doubt... But you don't default. The U.S. has been smart to issue its debt in its own currency.

So it's either economic catastrophe, as Yellen says, or inflation. If this is a negotiating tactic, Yellen basically guaranteed inflation, if you ask us... In other words, if you still thought there was an easy way out of this mess of a debt-based system, think again.

Frankly, this is the exact reason why Doc just went live with his retirement 'wake-up call' yesterday...

Unfortunately or fortunately, depending on how you look at it, Doc's briefing is timelier than ever... And it's truly a must-see event. (If you missed it, be sure to catch a replay here.)

Doc and his right-hand man, senior analyst Matt Weinschenk, revealed what they believe is the biggest 'lie" most folks in or close to retirement are being told today... and what action you can take to overcome it right now.

They talked about how you can prepare for whatever the economy throws your way... whatever plans the yahoos in Washington conjure up... and the consequences of it all on stocks, bonds, and your bills – as well as how cryptos might even fit into the picture.

It's worth watching the entire presentation, but we can't stop thinking about one idea in particular that we don't think can be said enough... It's about how inflation creeps up on people before government ever acknowledges the problem.

We've often called inflation a "hidden tax." And on this point, Doc put it very well...

I'm not saying we're on a speeding train to hyperinflation, like what's been going on in Venezuela, where literally everyone is a millionaire yet lives in poverty. But you have to understand, while people claim to be keeping tabs on [inflation], history proves no government nor financial force will actually do anything about it until the damage has already been done to your wealth.

Doc cited the Federal Reserve's own website, which notes that the Great Inflation lasted from 1965 to 1982... but that the government didn't really act on higher inflation until 1971, when President Richard Nixon implemented price controls.

We're already seeing the story play out today, either by negligence or incompetence...

We're not saying hyperinflation is hitting the economy tomorrow, but the foundation has been set.

Just look at what current Fed Chair Jerome Powell said on Tuesday in front of Congress when he was asked about rising prices in the economy...

After once again saying he thinks inflation spikes will be "transitory" – a label with which we've voiced our frustrations before – Powell admitted that "reopening" demand coupled with disrupted supply chains has led to more inflation than the central bank anticipated...

These effects have been larger than we expected and they may turn out to be more persistent than we expected.

Remember, the Fed's decision-making is based on backward-looking economic data. That means higher prices are usually paid at the cash register or in the online shopping cart months before the central bank could even do whatever it can to help the situation.

To us, that means you better take things into your own hands and protect your own money...

And most of the advice you hear today is not taking the inflation threat into account seriously enough...

As Doc said during his wake-up call, it's simply human nature. The truth is that most financial advisers today weren't working the last time we saw a great inflationary period in the 1970s... so many of them just aren't ready to help people with what to do about it.

Doc and Matt are able to help, though... They've taken the time to go back through a century of history and developed a portfolio-allocation strategy to take advantage of any type of market environment that may come our way.

Doc put it this way during the wake-up call...

If you overlook his advice today, you actually might be guaranteed to lose money in the years ahead. And he explained a big part of the reason in the first 10 minutes of the event... It's something that every investor today should be aware of, no matter your age.

If you're like so many other people who are worried about inflation and the high prices of many stocks today... and are wondering what the heck to do with your money... be sure to check out Doc's wake-up call as soon as possible. It will be well worth your time.

How We're 'Trapped' in the Current Financial System

As the Federal Reserve attempts to quell inflation fears, entrepreneur Jeff Booth is fullheartedly sounding the alarm.

Our editor-at-large Daniela Cambone recently sat down with Booth, the best-selling author of The Price of Tomorrow. And he explained how the corruption of money filters down to everything else – and why the system can't change itself...

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 6/23/21): Cintas (CTAS), Dropbox (DBX), Facebook (FB), Freehold Royalties (FRU.TO), Intuit (INTU), Cloudflare (NET), ResMed (RMD), and ProShares Ultra Technology Fund (ROM).

We recently received a few messages from folks who want to see Doc's wake-up call but missed the original airing of the event. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Some of us schmucks still have to go into work every day & can't watch videos at 10 in the morning... will Doc's 'wake-up call' video be available to watch later?" – Stansberry Alliance member Greg F.

"10 am EST, 8 am MST is a very bad time for a mom getting kids fed and off to camp. Please offer replay of Doc's seminar!" – Paid-up subscriber Sheila S.

Corey McLaughlin comment: Thanks for making us laugh, Greg... And we understand, Sheila.

Here's good news for you both – as well as anyone else who couldn't make the original broadcast of Doc's wake-up call... As we said above, you can watch a replay of the event right here.

All the best,

Corey McLaughlin
Baltimore, Maryland
June 24, 2021