In today’s Money Morning…history repeats itself…investing in the bigger picture…crypto isn’t going anywhere…and more…
I’m sure I don’t need to tell you that the crypto market is feeling the pinch right now.
Bitcoin [BTC], along with most altcoins, is down pretty significantly this month. Investors are clearly worried that rising rates and inflation are forcing capital away from speculative assets.
But at what point does panic turn to hysteria?
According to investment bank JPMorgan, we’ve already passed that point in crypto. They reportedly told their customers that bitcoin is being undervalued right now, so much so that they think it’s a better place to invest than US property!
In their own words:
‘While public markets already price in significant recession risks, and digital assets have repriced significantly following the collapse of terra USD [UST], some alternative assets such as private equity, private debt and real estate appear to have lagged somewhat.
‘We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds.’
This is a fascinating reversal for a money manager of JPMorgan’s size. Not to mention the fact that it flies in the face of their CEO’s — Jamie Dimon — view that crypto is worthless.
For everyday investors, though, it goes to show just how all over the place markets are right now…
History repeats itself
If you’re wondering just how much upside JPMorgan sees in bitcoin, they’re setting a target price of US$38,000. For context, at the time of writing, bitcoin is trading at US$29,445.
So you can clearly see that the investment bank is very bullish on the number one cryptocurrency.
Does that mean you should rush out and buy bitcoin?
Not necessarily.
It’s still a highly speculative asset that is best suited to investors who are happy to wait for a long-term payoff. Because in the short term, we may be on the cusp of another tough crypto winter.
This could culminate in a drawn-out phase of little to no price movement for a lot of crypto coins. It’s something that we’ve seen occur after almost every crypto bull run since its inception.
That’s not a bad thing for patient investors, but it’s certainly testing for those who aren’t.
As our in-house crypto expert, Ryan Dinse, concisely explained to his subscribers yesterday:
‘ECB boss Christine Lagarde came out this week and said “cryptocurrency is worthless”.
‘Meanwhile, Andreessen Horowitz announced yesterday they’d raised another US$4.5 billion for a crypto fund to take advantage of bargains in the downturn.
‘That brings their total investment in crypto to US$7.6 billion.
‘Partner Arianna Simpson indicated the timing for the new money injection was opportunistic:
“Bear markets are often when the best opportunities come about, when people are actually able to focus on building technology rather than getting distracted by short-term price activity.”
‘And the VC firm is certainly excited over the entire industry likening it to “the next major computing cycle” after PCs in the ‘80s, the internet in the ‘90s, and mobile phones in the 2000s.
‘So who are you going to believe?
‘A technocrat that’s never created a dollar of value in her whole life…
‘Or one of the best technology investing firms of all time?’
Investing in the bigger picture
The point in all this is that crypto isn’t going anywhere.
Despite what critics may be hoping for, this isn’t the death of bitcoin, Ethereum [ETH], or the blockchain. It’s just another blip in the long road to a financial revolution.
It has been in motion for more than a decade now, and no one can stop it.
Politicians, regulators, and market swindlers have all tried and failed. But change is coming no matter what they do.
That is what investing in crypto is really about.
The end goal isn’t to make a profit and convert your bitcoin to dollars. Your goal is to invest in and own a piece of technology that could one day replace fiat currency as we know it. That is where a lot of the true value of bitcoin lies.
As another famous investor, Bill Miller, recently noted:
‘Bitcoin is the only economic entity in the world where the supply is unaffected by the demand.’
In other words, it’s not beholden to many of the issues that are currently afflicting markets. Inflation and rising rates are direct consequences of demand-side monetary policy.
This is also why, as Miller emphatically states:
‘I consider bitcoin an insurance policy against financial catastrophe.’
Just keep that in mind the next time you see yet another hit piece on bitcoin or crypto.
Because while it certainly still carries risks and has its fair share of problems — crypto markets also offer unique opportunities. And while it may seem like the worst time to try and invest in this space, it may, in fact, be the best time…
Regards,
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Ryan Clarkson-Ledward,
Editor, Money Morning
Ryan is also co-editor of Exponential Stock Investor, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.
