So for those of you who are alive in 2017, which should be everyone watching this video, you must remember the crypto mania of three years ago. As we were sitting down ready to enjoy our Thanksgiving dinners, Bitcoin was surging past 8000, 9000 even $10,000 per coin.
And at this point all of us youngsters were at the table telling our grandparents and family members how they needed to go out there and buy some Bitcoin and be part of the future. And then just before Christmas, all of us who invested in Bitcoin we’re ready for our financial dreams to finally come true.
We had all secured a stake in the future, we convinced our family members to do the same, and we were ready to make millions of dollars. But then before Christmas of 2017, Bitcoin came crashing down. It hit a peak of over $19,000 before the unravelling began shortly after.
In fact, by Christmas day of 2017, Bitcoin had already tumbled from the high of over $19,000 to below 15,000 per coin and then eventually that price retraced to around $3,000 per coin just one year later.
And of course, this inevitably made the Christmas of 2018 a little bit awkward, because if your aunt Julie went out and bought Bitcoin during Christmas of 2017 well, one year later, she would have been down around 80% on that investment.
So fast forward three years to today and it would appear that we are repeating history, Bitcoin is surging again past 17,000, 18,000 even $19,000 per coin approaching that all-time high, going into Thanksgiving of 2020.
In fact, the prices are so wild right now and moving so quickly, it’s entirely possible that Bitcoin makes a new all-time high before this video is even posted.
So the question becomes, is this bound to be the crypto bubble of 2020 just like 2017 or is this time different? What I’m going to be doing here is sharing my overall thoughts on what is driving this cryptocurrency rally, whether or not I think it’s a bubble, and then I’m going to be revealing my actual cryptocurrency portfolio to show you guys exactly what I have invested in Bitcoin and other cryptocurrencies. Lastly, guys, if you wouldn’t mind just taking two seconds and dropping a like on this video.
Anytime you mention Bitcoin or cryptocurrency on YouTube, you’re pretty much guaranteed to get hundreds if not thousands of dislikes, just because this is a very polarizing topic. So if you don’t mind guys, thumbs up really goes a long way for the almighty YouTube algorithm.
So before we get into my thoughts on the 2020 cryptocurrency situation, let’s take a deeper look at what happened with Bitcoin back in 2017. Well, the main thing to understand here is that three years ago, the surge in Bitcoin and other cryptocurrencies was driven by retail investors.
And for those who are not familiar, retail investors are people like you and me, it’s individuals who are buying assets for their own personal portfolios. Institutional investors, on the other hand, are actually managing other people’s money and buying assets on their behalf.
A couple of examples of this are mutual fund managers, pension managers, and even endowment managers. Basically, back in 2017, it was your uncle or the mailman buying Bitcoin it wasn’t Wall Street and these large institutional investors.
And unfortunately, without adoption or acceptance from these big Wall Street institutional investors, Bitcoin was doomed for failure, which is why we saw that subsequent crash. You see, retail investors have a much shorter time horizon, they want to get rich quick and when things start to go against them, they’re very quick to go out there and sell investments and liquidate everything, I am pretty much going completely crazy, which is what happens with the stock market as well.
As soon as cryptocurrency prices started to go down, millions of retail investors panicked and decided to sell their positions as well. And then of course, we know where the story goes from here, Bitcoin went to a low of around $3,000 but over the last couple of years, it has slowly been returning and growing in value and then all the sudden we find ourselves back near that all-time high of 2017.
However, this time around things are completely different than 2017, and let me tell you why that is. First of all, the biggest difference between the crypto rally of 2017 and 2020, is the type of customer that’s actually purchasing Bitcoin.
You see, as mentioned earlier, in 2017, it was mostly these smaller retail investors that were purchasing Bitcoin and ultimately driving up the price. The Wall Street investors and the institutional investors were kind of waiting on the sidelines to see what happened, to see whether or not Bitcoin would stay around.
Well, now it’s not just retail investors, it’s a combination of the smaller retail investors, as well as these larger institutional investors on Wall Street that are scooping up Bitcoin. And where retail investors might have a couple of hundred dollars to toss into Bitcoin or other cryptocurrencies, these institutional investors are often managing millions, if not billions of dollars.
And in addition to that, these institutional buyers are typically longer-term investors, they’re not going to buy bitcoin and then sell it two or three days later because they changed their mind, they’re investing for a much longer-term time horizon.
So not surprisingly, in 2020, we have seen some major institutional buying of Bitcoin, as well as some major acceptance of cryptocurrency from these big Wall Street billionaires. For example, we have billionaire Paul Tudor Jones.
He believes that investing in Bitcoin right now is similar to investing in tech companies like Apple or Google way back in the early days before they were a household name. And as far as this billionaire’s portfolio goes, he says he has around one to 2% of his total portfolio allocated into bitcoin.
Not only that, but huge tech companies have stepped up to the plate as well, and some have even begun purchasing Bitcoin themselves. Earlier this year, the payment processing company Square, made the decision to purchase $50 million worth of Bitcoin to hold on their balance sheet instead of cash.
Then we have another Wall Street billionaire named Stanley Druckenmiller. He came out and said that he does own Bitcoin in his investment portfolio, but he didn’t specify any amount. He also mentioned that he is going to be shorting or betting against the US dollar. Lastly, we have hedge fund manager Bill Miller.
Recently he said, “I think every major bank, every major investment bank, every major high net worth firm is going to eventually have some exposure to Bitcoin or what’s like it.” So many of the billionaires that criticized Bitcoin in 2017, are either outspoken about it in a positive way, or maybe even putting their money where their mouth is, and putting some of their own portfolios into Bitcoin and other cryptocurrencies.
And this could lead to a domino effect where it becomes common for these institutional investors to allocate a certain amount of their portfolios into cryptocurrencies like Bitcoin.
Even if each institutional investor and hedge fund manager out there allocated just 1% of their portfolios into bitcoin, that would be huge for cryptocurrency and the price and the widespread adoption.
So the next reason for the 2020 cryptocurrency rally and another reason why it’s different from 2017, is the way in which people are purchasing Bitcoin and other cryptos.
So back in 2017, you had to buy Bitcoin through a separate cryptocurrency exchange. And this of course required you to go out there and open up a completely separate account, you had to take photos of your ID to verify your identity and jump through all of these different hoops to eventually be able to transact Bitcoin.
Now, there are some gigantic mainstream players that are allowing you to purchase Bitcoin and other cryptocurrencies directly on their platforms. One of the biggest ones on that list is PayPal which announced in October that they will be allowing their users to buy hold and sell Bitcoin directly through PayPal.
And then Square followed suit as well and allow people to do the same thing through the cash app. The Commission-free trading apps, Robinhood and Webull followed suit as well offering cryptocurrency trading right on that brokerage platform.
Lastly on the list here we have Fidelity, one of the biggest brokerages out there that rolled out a cryptocurrency platform for institutional buyers. So now instead of having to open up a completely separate account in order to purchase your cryptocurrency, people are able to do it through an account that they likely already have.
And when there are fewer hoops to jump through, and people are able to utilize names that they trust and know, like PayPal, well, a lot more people are willing to go out there and begin purchasing cryptocurrency.
This is similar to the convenience of being able to buy Nike products on Amazon, where you already have an account rather than opening up a whole new account with Nike. So the next point I want to cover here is something called the Bitcoin block reward halving, which happened earlier this year in May.
Now, this does get a little bit complicated here guys, but I’m going to go ahead and give you a very simple explanation. So Bitcoin miners are rewarded with Bitcoin in exchange for completing complicated calculations.
And essentially, these calculations are used to validate Bitcoin transactions. However, just about every four years, the reward for completing these transactions is reduced by 50% essentially controlling the new supply of Bitcoin available to the market.
And as mentioned earlier, we just had our third Bitcoin reward halving in May of this year. Prior to that, miners received 12.5 Bitcoin per block of calculations, and now that number has been reduced to 6.25. And just about four years from now, that will be reduced by another 50%, and so on, and so on, just like that.
And this is all to ensure that we have a controlled supply of Bitcoin coming to the market, while also incentivizing people to run these Bitcoin miners that allow the whole network to stay afloat.
But the important thing to understand here is that 50% less Bitcoin is going to be mined every four years, resulting in a smaller and smaller supply coming to the market. And surprisingly, the Bitcoin halving event itself doesn’t often result in an immediate rally, it usually comes a little bit after which was the case during the last two halvings.
But the crazy thing is, all of the new Bitcoin being mined is being purchased through just two platforms and those are Square and PayPal. According to Pantera Capital, PayPal users are now purchasing around 70% of all of the new Bitcoin coming to the market through the Bitcoin mining and then square users are buying about 40%.
So, between just these two platforms, all of the Bitcoin being mined and then some is being purchased on these platforms, which explains why we’re seeing so much demand for this cryptocurrency and why that price is climbing higher and higher.
And lastly guys, my final reason why this time might be different from the cryptocurrency rally, is what we have currently been seeing with the fiat currencies of the world. Now, if you’re not familiar, a fiat currency is simply a currency that is backed by a government rather than a commodity like gold.
In the past, we were on the gold standard where dollars were backed by gold but now they’re just backed by the overall faith and strength of the US government and pretty much every major nation out there operates with this fiat currency model.
But since the money is not backed by any physical resource or commodity, you could potentially print or create an infinite supply of money, which is exactly what we’ve seen happen in 2020 as a result of this global pandemic. When a government needs more money, they can simply just print more of it out of thin air.
Now, this, of course, is a bit of a generalization and a government can’t just print infinite money without consequences. We’ve seen that happen in the past, and it can massively devalue a currency.
But nonetheless, this money printing has become a part of our everyday lives. We just have a fancy word for it called quantitative easing. Well, in 2020, there has been a lot of money printing here in the United States.
In fact, estimates say that nearly 22% of all US dollars that exist were created in 2020. And this of course, is the result of the multi-trillion dollar stimulus packages that were passed in response to the global pandemic that shut down the world economy.
And this of course has spooked a lot of investors and pushed them away from the US dollar. Investors want something that you can’t simply create more of. And just like there is a finite supply of gold and silver and other precious metals on this earth, there’s also a finite supply of Bitcoin. You can’t simply print more or make more of it.
Only 21 million Bitcoins will ever exist with a controlled and dwindling supply. On the other hand, there’s a potentially infinite supply of these fiat currencies, where governments can just turn on their money printers.
So in 2020, gold prices have surged and so have Bitcoin prices, because a lot of people are leaving these fiat currencies in exchange for something that you can’t just make more of. So those are my thoughts on the 2020 Bitcoin rally and that is why I think this time may in fact, be different.
So that being said, what am I doing with my own cryptocurrency portfolio? So in just a second, we’re going to jump into my computer and I’m going to show you guys what my portfolio looks like currently.
Essentially, I’ve been buying Bitcoin in small amounts, dollar cost averaging over the last couple of years. I’ve also gotten a lot of free Bitcoin through the Coinbase referral program, which is what I use to purchase Bitcoin myself.
Essentially, if somebody purchases $100 worth of Bitcoin using my link down below, they get $10 of free Bitcoin and I get $10 for free as well. So if you guys want to use that link yourself, you’re more than welcome to it’s going to be down below, if you want to get 10 bucks worth of free Bitcoin and support my channel in the process.
So in total over the last couple of years, I have purchased 1.5 Bitcoin at a cost basis of $7,196 per coin. All of the rest of the Bitcoin that you’re going to see in my portfolio, was completely free because it came from Coinbase referrals.
That being said guys, let’s jump into my portfolio now. Alright guys, so here we are inside of my cryptocurrency portfolio and as you can see, it is currently worth just about $36,000. Now a lot of the gains in this account are over the last month or so, as you can see in the last month I’m up about 50% or close to $12,000.
Now as far as this overall portfolio goes, the majority of my money is in Bitcoin 96.25% to be exact, which is around 1.8 Bitcoin totals. Next, I have a little bit of Ethereum which was actually given to me.
Somebody randomly sent me Ethereum a couple of years ago and that was pretty cool. So I have one point for Ethereum, which is currently worth around $862. And then lastly, I do have a 5.4 Litecoin, I used to have a Litecoin miner with my brother as kind of a side project, and we were mining it for a couple of months and so we got some Litecoin he sent it to me and so, as a result, I have 5.4 Litecoin as well.
Now, I store my Bitcoin offline in a hardware wallet using the Ledger Nano S and this is ledger live, which allows you to track your overall investment portfolio. This ensures that my cryptocurrency is stored safely and I am the only one in control of it, that way there’s no risk of this getting hacked and I am getting my cryptocurrency stolen.
Now, that being said, a lot of people might be curious what my overall cost basis is on my portfolio, so let me go ahead and show you guys that spreadsheet now. So, I started dollar cost averaging into bitcoin on December 16 of 2019, where essentially every single week I was buying just about $500 worth of Bitcoin.
After paying fees, this added up to 492.66 every single week. And in this sheet, I logged how much I was paying per Bitcoin and what I got in total each week. And then I did do a larger lump sum investment back on March 12, when Bitcoin fell to just around $6,000 per coin, I bought 0.56 for around $3500.
And then my most recent Bitcoin transaction was purchasing about $1,000 worth on May 22. So besides that, I haven’t put any additional money into bitcoin, it’s strictly been from those Coinbase referrals. And those referrals are accounted for up here, I have basically earned 0.3739 Bitcoin in total from those free Coinbase referrals.
So in total across this entire investment portfolio, my cost basis on everything is $10,838.52, which means if you count my coin base referrals towards my total, my average cost basis across my entire Bitcoin portfolio is about $6,000 per Bitcoin.
So overall, since my entire cryptocurrency portfolio is worth around $36,000, and since my cost basis is under 11,000, I have seen an overall return of 232.15% since I started this back in 2019, but I was earning those Coinbase referrals for many years prior. So anyways guys, there you have it.
On the surface, it might appear that we’re repeating the same events of 2017, but I believe there’s good reason to believe that this time may in fact be different. If you guys enjoyed this video and you want to see more Bitcoin or cryptocurrency-related content on this channel, make sure you hit a like on this video and drop me a comment down below.
And if you’re looking to buy bitcoin as a complete beginner, I have a really helpful video tutorial that walks you through step by step exactly how to buy Bitcoin and then store it safely offline on something called a hardware wallet which is exactly how I store my cryptocurrency.
So I’ll have a link down below for that video as well as that Coinbase link if you want to go ahead and grab $10 worth of completely free Bitcoin. Thanks so much for watching guys, make sure you subscribe and hit that bell for notifications and I hope to see you in the next video (light music).