The Weekend Edition is pulled from the daily Stansberry Digest.
If someone told you that bitcoin's price would be where it is at the beginning of 2021, you'd be skeptical...
It's very likely you'd have found the assertion of "Bitcoin $30K" a bit grandiose... even crazy.
Ten years ago, one bitcoin cost 30 cents... Ten months ago, it was less than $7,000... Heck, just 10 weeks ago, bitcoin traded around $17,000.
If you look at bitcoin's all-time chart, it's in "parabolic" territory today.
The cryptocurrency's value has roughly tripled since the end of September and has only recently taken a breather from a new all-time high above $40,000.
This week, bitcoin traded around $37,000. That’s 300% higher than its price one year ago...
What in the world is going on?
Over the last several months of 2020, we reported that institutional investors were starting to pile in to bitcoin... and we're talking about it again today.
Big money movers on Wall Street... hedge funds... digital-payments companies... even stakeholders in pension funds... are buying bitcoin in massive amounts, driving the price higher.
Names like BlackRock (BLK), the largest asset manager in the world... Guggenheim Partners... hedge-fund titan Paul Tudor Jones... insurance company MassMutual... PayPal (PYPL)... and Square (SQ)... have all either already said they've allocated parts of their portfolios to bitcoin or are considering investing hundreds of millions of dollars in cryptocurrencies.
I'm not sure anyone could tell you with 100% certainty what the endgame of all this is, though we have ideas that we will explore today. But if nothing else, it shows the "going mainstream" premise that cryptocurrency proponents like Crypto Capital editor Eric Wade have been expecting is now really happening...
In December, Wall Street's "hearts and minds" were taken over by bitcoin...
And their bottom lines were, too...
One of the biggest indicators of this is the amount of money flowing into the publicly traded Grayscale Bitcoin Trust (GBTC), a well-regulated trust that holds roughly 3% of the world's bitcoin supply. Its moves reflect bitcoin's value.
In December, as GBTC's price rose 35%, its daily volume was in the double-digit millions in 17 of the month's 31 days, including its highest-traded day of the year on December 17 (28.6 million shares).
The last time we saw that much activity in GBTC for so long was back during the bitcoin bubble of 2017, as newbies got in without knowing why and speculated... to the tune of 20 and 30 million shares traded each day.
This time around, GBTC's volume wasn't as extreme, and it was more consistent... thanks to the institutional investors. In the third quarter of 2020, the so-called Wall Street "smart money" accounted for 81% of the $1 billion in inflows to GBTC.
As Eric put it in Crypto Capital's December issue after bitcoin's price moved past its all-time high of $20,000...
Bitcoin reaching its old highs is validation for the industry. It's now harder to compare it to one-time bubbles like the Dutch tulip mania in the 1600s where prices hit higher highs and higher lows over many years. As the saying goes, "the tulips never bloomed twice."
Today, some "big name" investors are making splashier public moves in bitcoin than others...
Take the "macro" bet of Michael Saylor, the CEO of Virginia-based software company MicroStrategy (MSTR)...
He has grabbed attention and headlines by putting more than $1.2 billion of MicroStrategy's funds into bitcoin and encouraging Tesla (TSLA) CEO Elon Musk on Twitter to go all-in on cryptos, too.
Saylor says he considers bitcoin his company's "primary treasury reserve asset."
But most notably in the grand scheme of the global economy, Saylor has boldly raised debt (thanks to the Federal Reserve's rock-bottom interest rate policy) for the sole purpose of buying bitcoin and beating the central bank at its own game, so to speak.
In a way, everyone who is buying bitcoin is making this bet today...
They're putting money in a scarce asset... designed to have low inflation... that was born 13 years ago out of the financial crisis with the idea of working completely outside the traditional financial system. It's the anti-central bank trade.
And given the latest and continued tactics of the Fed in response to the COVID-19 pandemic, it's crypto's time to shine.
In an interview with Stansberry's editor-at-large Daniela Cambone just before the end of 2020, noted crypto bull Max Keiser colorfully detailed this idea... And he compared Saylor's debt-raising-to-buy-bitcoin tactics with how George Soros (with his then protégé and now bitcoin bull Stanley Druckenmiller's help) "broke" the Bank of England in 1992.
Soros made a quick $1 billion betting against the British pound on "Black Wednesday," the day speculators forced the British government to pull the pound from the fixed-rate based European Exchange Rate Mechanism ("ERM").
Back then, the Bank of England was looking to cut rates but couldn't because it would have devalued the British pound. Soros stepped in and did the devaluing himself, selling pounds that he borrowed from banks and using the proceeds to buy German marks...
If all went right, he could buy back British pounds cheaper to return what he borrowed.
Soros started with a modest $1.5 billion short, but rates didn't budge.
Then, on September 16, 1992, the German Bundesbank President Helmut Schlesinger surprisingly made "unauthorized" comments in interviews with the Wall Street Journal and a German newspaper where he didn't rule out some currencies coming under pressure.
From the 2010 book, More Money Than God, a history of hedge funds, English journalist Sebastian Mallaby tells this "trade of the century"-type story...
Stan Druckenmiller, the chief portfolio manager at George Soros's Quantum Fund, read Schlesinger's comments on Tuesday afternoon in New York. He didn't care whether they were "authorized;" he reacted immediately.
Schlesinger had made it obvious that the Bundesbank was not going to help the pound cling onto its position inside the exchange-rate mechanism by cutting German interest rates. The devaluation of sterling was now all but inevitable.
Druckenmiller walked into Soros's office and told him it was time to move. He had held a $1.5 billion bet against the pound since August, but now the endgame was coming and he would build on the position steadily.
Soros listened and looked puzzled. "That doesn't make sense," he objected.
"What do you mean?" Druckenmiller asked.
Well, Soros responded, if the Schlesinger quotes were accurate, why just build steadily? "Go for the jugular," Soros advised him.
Druckenmiller built his short position to a massive $10 billion. With a flood of selling hitting the market, the British pound came under tremendous pressure... and the Bank of England was sent into complete chaos.
After first buying 27 billion pounds on the open market on September 17, 1992, that night Britain announced it would leave the ERM, allowing the devaluation of the British pound.
Keiser continued in his interview with Daniela...
We're seeing a similar thing going on with bitcoin. What Michael Saylor figured out... and others... is that they have the Federal Reserve bank and other central banks in a very precarious position because those banks have artificially pushed interest rates down to these extraordinary levels of almost zero and $18.4 trillion [of debt is] now negative.
If they can borrow, as Saylor did, at 75 basis points, $650 million and buy bitcoin, they are in a position of a speculative attack on the Federal Reserve bank.
Make no mistake about this... Michael Saylor and the bitcoiners are attacking the Federal Reserve bank and the global central banking system, as Soros did to the Bank of England. That's kind of the template that's being used globally.
As a result, Keiser told Daniela he believes we could "very easily" see bitcoin trade for as much as $400,000 "pretty quickly" as more big money piles into this trade, which is the expression of a modern-day attack on the Fed and global central banks...
The central banks have left themselves open to this arbitrage, to this attack and it's on. The game is on now and no one is pretending that this is not happening anymore...
There's a vector out of the central bank collusion that is destroying the world... America is run by a clique of super billionaires and you have to understand what they're doing.
Eric also gave his latest take on bitcoin's surge recently...
And in short, he's been echoing what our colleague Dan Ferris has previously shared many times with readers... Prepare, don't predict.
You may agree with Keiser and think that bitcoin is headed to six figures soon... and the big-picture reasons are in place... but nobody knows for sure.
So as he always has throughout bitcoin's run higher, Eric laid out a great game plan for his subscribers invested in bitcoin today about what to expect in the months ahead – and what they can do about it.
A lot depends on your timeline. Based on bitcoin's price history, including the 2017 bubble, Eric says we should expect volatility in the short term following the recent parabolic run higher. From Eric's last weekly update of 2020...
We should be just as prepared to see $20,000 [bitcoin] as to see maybe $200,000... Be prepared... and think, "Am I buying more at $20,000? [Am I selling] at $50,000, $100,000, $200,000? [Am I selling] a few percent?"
We're preparing for volatility and sell-offs. We're preparing for people who made a name for themselves by buying bitcoin in 2020, maybe starting to sell off. Keep in mind, bitcoin can be and [can] do everything that we said it is and does – superior technology, low inflation, peer-to-peer – it can do all that and still sell off as you can see [in] 2017...
That should make January pretty exciting to look forward to for all of us.
Eric's thesis is playing out exactly as predicted.
So, now more than ever, it's critical you have a plan in place to profit from what's to come in the crypto space.
As Eric believes, $40,000 bitcoin – which we saw just recently – is just the start of what’s to come. But the window to make the biggest gains in the world’s most popular cryptocurrency and others might be closing fast.
All the best,
Editor's note: Bitcoin's price continues higher... And it's time to take advantage of its momentum before the biggest gains are off the table. For a limited time, Eric is revealing the exact strategy he used to help a small group of Stansberry subscribers see triple-digit gains in cryptos. If you're searching for a plan to earn big in this lucrative space, click here to learn more.