Disclaimer: The information in this blog represents the opinions of its author and is for educational purposes only. It is not intended as investment advice. Cryptocurrency markets are extremely risky so you should only invest money you are willing to lose.
Into The Game
Imagine you're an investor with a $10 million portfolio. You've heard all the kids talking about these new digital coins and you've been thinking about getting into the game.
You've also heard of Silk Road and Mt. Gox, Chinese bans and Jamie Dimon bubble-talk.
You figured maybe you'd take the plunge and try to make some money - putting a small percentage of your portfolio into cryptocurrencies, but as it turned out, electronically linking your bank account to some sketchy exchange you've never heard of, one that you worried might be hacked or shut down, scared the bejeezus outta you - so you just stayed on the sidelines.
Imagine how many investors meet that description, and are just sitting on the sidelines, waiting for the green light. As of December 18th, all that scared maybe-money, is about to get into the game.
Too Legit To Quit
Scandals, hacks, bans, forks and scathing vitriol have all dragged the price of bitcoin down and magnified the din of bubble-talk, but bitcoin has proven itself too legit to quit, bouncing back even stronger after every negative turn.
December 18th will be a watershed for bitcoin, giving it the legitimacy it has struggled so hard to attain, when it begins trading on the Chicago Merc, the largest most respected derivatives exchange in the world.
From The Shadows
It is extremely rare for any asset to have to dig itself out of such a deep hole of universally negative PR. Bitcoin has, almost overnight, emerged from the shadows of the dark web to become a beacon of optimism and hope that a revolutionary new math-based technology can replace an antiquated obsolete one in which a few corrupt individuals control the entire world economy.
Liquidity Up The Wazoo
Lack of legitimacy is just one of the reasons why traditional investment portfolios have not included cryptocurrencies. The other reason is liquidity. To institutional investors, the ability to enter and exit the market quickly, at a good price, without affecting the market too much, is crucial for an investment to even be considered as part of a portfolio.
Orders of Magnitude Greater
When futures contracts start trading, bitcoin will be connected to the global economy, and the $20-trillion-a-day futures markets, giving it a level of liquidity orders of magnitude greater than any it has ever had on individual exchanges.
The mainstreaming of bitcoin, along with its new global liquidity, will bring a tsunami of cash not only to bitcoin, but to the cryptocurrency markets in general.
There's nothing normal about cryptocurrency markets. With normal assets, people start talking about a "bear market" on a 20% decline. Bitcoin can swing 20% in either direction in a day or two, and barely elicit a yawn.
When the coming tsunami of cash hits bitcoin, the price of the cryptocurrency juggernaut is likely to begin jumping by the thousands, with a $20,000 Christmas a real possibility.
Jumping By Thousands
We will look back nostalgically at a time when we used to talk about the price of bitcoin in hundreds - 68, 74, 87, etc. - now we're starting to talk thousands , 11, 13, 15 ... Not to mention the fact that the cryptocurrency juggernaut which emerged from the shadows of the dark web is now bigger than McDonalds, Paypal, IBM, Boeing, Disney, GE, Bill Gates, Warren Buffett, and the economies of 135 countries including New Zealand.
The Bubble Misconception
The common misconception perpetuated by all the bubble-talkers is that a bubble is only measured by the percentage gains against its own price. Certainly in this regard bitcoin could be called a bubble comparable to the Dutch tulip bulb mania and even bigger than the dot-com craze of the 1990s.
But when compared to total market capitalization, bitcoin is a tiny fraction of the value of all the dot-com stocks, and in the global currency markets it's nothing but a tiny guppy in an ocean of untapped liquidity.
According famed tech investor James Altucher, bitcoin's giant move upward is far from over.
99.9% Left To Conquer
"There's $200 billion in cryptocurrencies out there and over $200 trillion in demand for money" - so there remains about 99.9% of the global financial system yet to conquer.
Altucher sees the looming collapse of a single fiat currency, like Venezuela's Bolivar, as the trigger that could drive bitcoin to $50,000, and he predicts that bitcoin will eventually surpass $1,000,000.