Dollar Revaluation Imminent

Today, I want to tell you the story of history’s most famous ‘idiot’ investor.

His name was Timothy Dexter, and you’ve probably never heard of him.

I think there are a few important investing lessons for you in his story. Things that you can factor into your investing plans for 2025.

From the power of thinking for yourself to the benefit of ignoring the opinions of others. Even just the role of luck in investment markets.

But there’s one particular reason I’m telling you his story today.

As the old saying goes, history doesn’t repeat, but it often rhymes. And if I’m right, in just over two weeks’ time, we could see one of Dexter’s most unlikely trades play out again.

Let me explain…

From rags to riches

Born in 1747 to poor Irish immigrants in Massachusetts, young Tim Dexter was destined for a life of poverty.

As a child, he was an indentured servant on a farm, where he worked day in day out for eight gruelling years.

At the age of 16, he finally earned enough money to buy his freedom.

He learned a trade and became a leather tanner in Boston, where he got the first lucky break of his life.

He met and married a wealthy widow named Elizabeth Frothingham and promptly moved into her Charlestown mansion.

Dexter was suddenly thrust into the elite of Boston society.

But these snobs quickly rejected the uncouth outsider. They mocked his manners, his lack of learning and his rough speech.

It was water off a duck’s back for Dexter, who had overcome much more difficult obstacles in his tough life.

He ignored their slights and set about learning all he could from these rich people.

At the same time, he realised he knew something these well-bred folks did not.

And that was that turbulent times presented opportunities behind the escalating risks.

In the late 1700s, the USA was in political and financial turmoil.

The fledging nation had just won its independence from Britain in 1776, but its future was still far from secure.

By 1781, the country’s currency — the Continental Dollar — had plummeted.

The sore-losing Brits flooded the market with counterfeits, and the value of the US dollar was now just 2.5% of its original worth.

And this is when Dexter did the unthinkable…

While all his wealthy neighbours desperately tried to sell their Continentals, Dexter invested almost every cent he and his wife had in buying it.

He ended up owning almost 20% of ALL Continental dollars EVER PRINTED!!!

His neighbours thought he had gone mad – that he was the poor idiot they always thought him to be.

But in 1889, Dexter’s big gamble paid off.

To solve the ongoing currency crisis, the US’s first Treasury Secretary, Alexander Hamilton, declared that all Continental Dollars could be exchanged for US Treasury Bills — the debt of the US government.

He fixed the rate at 1% of face value.

Most people had lost everything by selling their dollars at any price, and Dexter had been buying them all up for far less than 1% of face value.

When Hamilton made this announcement, Dexter and his wife made a fortune from their ‘worthless paper’.

Dexter’s story doesn’t end there, and I’ll share some more of his amazing investing decisions at the end of today’s piece.

But let’s pause here for a second and fast forward to the present…

A new ‘Hamiton’ moment

In January 2024, BlackRock, the world’s largest money manager, launched the first spot Bitcoin ETF.

Many said this product would be a flop and there’d be ‘no demand’ for it.

How wrong they were…

Instead, the 11 new Bitcoin ETFs took in a combined US$35.24 billion in inflows for the year.

BlackRock’s Bitcoin ETF was the third most invested in ETF behind two mammoth S&P 500 ETFs from Vanguard and iShares.

BlackRock now holds just under 0.5% of all the Bitcoin in existence.

The speed at which they are buying is unprecedented, as this chart shows:

At the same time, MicroStrategy—a US-listed company chaired by Michael Saylor—was also on a massive Bitcoin buying spree in 2024.

After launching its Bitcoin buying strategy four years ago, the company now owns roughly 446,400 Bitcoins on its balance sheet (almost as much as BlackRock).

Every green dot below is a buy point:

Incidentally, thanks to this strategy, MicroStrategy has been the best-performing stock of the past four years and has just been admitted into the Nasdaq 100 index.

The stats don’t lie:

Despite this immense success, many people still call Saylor ‘an idiot’ for buying Bitcoin.

And I reckon if you asked your financial planner, local bank manager or friendly accountant what they think about Bitcoin right now, I’d bet 99% of them will still tell you it’s a scam.

It’s a bit like how the elite of his time treated our old friend Dexter.

But the fact is, the old guard of any era never understands seismic shifts in the moment.

Funnily enough, the fact Blackrock has shifted its position on Bitcoin so quickly in 2024 should be a big clue that at least some in the ivory towers of finance see big changes ahead.

Maybe in as little as two weeks on Trump’s inauguration day.

You see, incoming President Donald Trump has committed to a massively pro-crypto agenda.

He’s even backed the idea of the US setting up a strategic reserve of Bitcoin.

Will he say something to this effect on 20 January?

Could this be Bitcoin’s ‘Hamilton’ moment?

Prediction markets give it a 24% chance right now:

That’s a pretty high figure, given the stakes at play, if he does follow through.

We’re talking about the current reserve currency issuer – the US – committing to owning another asset to back their own currency!

If that happens, we could see a massive revaluation in the price of Bitcoin over 2025 as the masses suddenly realise that the money they’re holding in their bank account is the real ‘scam’.

Anyway, this could be the biggest story of 2025, and it could kick off in just a couple of weeks.

I’ll be watching…

But to finish off today, let me quickly share a couple more of Dexter’s famously ‘stupidly’ successful investing decisions…

Selling ice to the Eskimos

After making his fortune in the Continental dollar trade, Dexter kept on investing.

After someone joked, he should export bed warmers to the tropical West Indies, Dexter — failing to see the absurdity of the suggestion — did just that!

He shipped 40,000 bed warmers to the Caribbean.

As it turned out, Caribbean molasse producers discovered that these bed warmers made perfect ladles.

Dexter sold every single one at a 70% profit, making his second fortune!

But he wasn’t done yet…

For his next trick, he attempted the impossible.

He decided to sell coal to Newcastle – England’s coal mining capital.

This was like trying to sell ice to the Eskimos!

Yet, as luck would have it, his ship arrived during a miner’s strike, when coal prices were skyrocketing in industrial Britain.

Dexter grew more eccentric as his wealth increased.

He faked his own death so he could attend his own funeral, he wrote a book that had no punctuation marks, and he told everyone his dead wife lived with him – when she was very much alive.

While Dexter’s life seems to be a case of extraordinary dumb luck, I believe he made his own luck, too.

He saw opportunity where others saw only chaos.

He never gave up.

And he backed his own judgement above all others.

To me, that is the mark of a successful investor.

Speak soon…

Regards,

Ryan Dinse,
Editor, Crypto Capital and Alpha Tech Trader