Bitcoin is going to $400,000. I’m sorry, did you just say $400,000? Just so we’re clear, this isn’t my prediction. No, this was Scott Minerd, who is with Guggenheim Investments, which is a global investment management firm.
But he went on record saying based on his research that Bitcoin is worth or should be worth $400,000. And just in case you don’t believe me, I’ll let you go ahead and hear it out of his own mouth.
– [Scott] Our fundamental worth shows that Bitcoin should be worth about $400,000.
– Now, if you listen closely, you can hear one of the people interviewing him almost spits out their milk whenever he says $400,000. – [Female] Whoa. – Now, chances are you are wondering how in the world did he get to $400,000 on his Bitcoin valuation? Well, we’re going to get to that and a whole lot more (upbeat percussion music) What’s going on, y’all? Welcome back to Wealth Hacker Labs. I am your host, Jeff Rose.
And Bitcoin is one of those investments that for several years, or maybe just a year or two, I completely wrote it off.
Because anytime I published any video here on YouTube, I always had at least a dozen people commenting about how I need to go out and buy Bitcoin, how cryptocurrency is the way of the future, and I just got so annoyed because back then, it was about 2017 where everybody was saying that Bitcoin was going to $100,000.
Well, it got up to I think around $19,000, $20,000 and then boo, decided to plummet back down and then all of those people vanished.
Back then, I recognized that most anybody that was commenting on my YouTube channel or any YouTube channel for that matter, talking about Bitcoin, talking about cryptocurrency, most of them had zero clues how it was making money, had zero research or any data to really support the fact that it was going to $100,000.
And at that point in time, this thing was all based on FOMO. – You know what FOMO is? – [Audience] Yes! – It’s, so it stands for fear of missing out.
– So for a while, I wrote it off. I’m like you know what? I’m not buying any Bitcoin, you have no idea what you are talking about. I’m going to stick to my stocks, I’m going to stick to my online business and focus on what I know.
But then I saw the market drop, I saw Bitcoin go from almost $20,000 down to $3000 and I thought if this is something worth considering, then now might be a time to get in. Fast forward to present day and I’m grateful that I did get in. Now I did not get in for a huge amount, I did not in fully at the bottom, but I did get in for substantially lower than what Bitcoin is priced today.
So for those that don’t know anything about Bitcoin, let’s go ahead and take a look at what Bitcoin is trading at right now. And even I am shocked to see how much Bitcoin has increased for 2020 going into 2021.
So at the time of this recording, Bitcoin is trading at $31,400. So we are now, it’s January 4th at the time of this recording, it actually dropped a little bit, it hit an all-time high of $34,000. And this was only recently after crossing the $30,000 mark for the first time. So Bitcoin had never been at $30,000.
Well, we got to there January 1st, I believe, and then boo, just skyrocketed to 34, dropped back down today to $31,400. So as I mentioned, I did get in, did not get in at the bottom and I’m calling the bottom whenever it dropped down to around the $3,000, $4,000 mark, but I did get in. So for me, I opened a Coinbase account.
There are a few different places that you can open a cryptocurrency account and purchase Bitcoin. But as far as one of the top ones right now, Coinbase is by far one of the most recognized, and I can do another video or talk more about Coinbase.
So here is my account value. So I’m not a Bitcoin millionaire. The funny thing about Bitcoin was I initially purchased $1,000 worth. I bought it, I think at that time it was around $7,000. I planned on purchasing $10,000 more. I thought that I was transferring $10,000 in to purchase more Bitcoin.
I actually purchased $10,000 worth of Bitcoin and then transferred another $10,000 in to purchase more Bitcoin. So all in, I purchased around $20,000, $21,000 worth of Bitcoin. The average, I think Bitcoin price, almost a share price, I guess you’d call it a share price, was somewhere around let’s say $5,000 or $6,000, roughly about what I paid for my Bitcoin.
But $20,000, $21,000 invested, I have more, at this time, quadrupled my Bitcoin investment. Like that is just mind-blowing. Like this is not how it’s supposed to be. Typically investing does not work this way, I guess unless you’re buying Bitcoin or if you’re buying Tesla stock, which is another big one over the last year or so.
But Bitcoin is up over 300% over a year to date. I mean, it is insane. So what is one of the main factors of why Bitcoin is soaring, why it continues to skyrocket, and is there any validity in the fact that this Scott Minerd says that it’s going to be priced or valued at $400,000? First to address the validity in the valuation.
Scott Minerd is not the only one that has a bullish look on Bitcoin. I mean, there are other people out there. Here is an article to read on Coindesk, and this is coming from the Bloomberg Crypto in a monthly report.
So they say that their prediction 2021, from Bloomberg analysts, say that Bitcoin could hit $50,000. Now that is a much smaller amount than the $400,000, but still, that is still a $20,000 increase from what we see today. But what are some of the main reasons why we are seeing this increase? And here’s an article I came across on CNBC.
First two bullet points I feel like more mainstream acceptance. So we are seeing more people accepting the fact that Bitcoin is not a fad, it is not something that is some sort of getting rich scheme that just is here today and gone tomorrow. And we are seeing this because we are seeing more prominent companies either investing in Bitcoin or modifying the way that they’re offering their services to accommodate cryptocurrency and also Bitcoin.
So in this article, it mentioned Square, it also mentions PayPal. Here we have this article where Square invested $50 million into Bitcoin, this is October of 2020. And then PayPal, so they launched a new service that enabled users to buy, hold, and sell cryptocurrency on their platform.
And these are not just simple things. I mean, let’s talk about PayPal, in particular, like this is not just a simple oh, we’re just going to turn on a switch and offer this ability to be able to buy, hold, and sell cryptocurrency.
This takes a lot of money, a lot of infrastructures, a lot of resources to adapt your platform, to be able to offer this. So that if they’re investing a lot of money to be able to offer this on their platform, then they truly believe that Bitcoin is going to be something that is worth mentioning, that is worth basically it’s worth shelling out millions of dollars because they, they recognize if they don’t they’re going to miss out on an opportunity to make a lot of money.
And the other reason why I feel Bitcoin is not going away anytime soon is that you are seeing much larger institutional investors that are pumping money into Bitcoin.
One, in particular, is JP Morgan. I’m not sure exactly how much they have shelled out investing into Bitcoin, but one of their key analysts say that $100,000 is very reasonable as a target for 2021. But they’re not the only investor. You are seeing institutional investors, you’re seeing mutual funds.
Just recently they announced that they are filing for an ETF to be released, that is a cryptocurrency ETF. This is something I think they tried to do a couple of years ago but then when Bitcoin, the Bitcoin price dropped, then they put it on hold.
But just recently, I just read, I think it was last week, where they just filed again to release a cryptocurrency ETF. And once you’re making an ETF out of cryptocurrency, then you definitely know it’s not going away.
Now, I’m not the only one that has changed my tune on Bitcoin. And I’ll also probably not the only one that is not regretting that I didn’t buy more. I’m grateful that I bought what I did, but man, maybe I should have bought a little bit more.
But I came across this blog post and this comes from Nick Magguilli. He is the Chief Operating Officer for Ritholtz Wealth Management and he just published this today. Actually, I came across this on Twitter about his thoughts on Bitcoin.
And one of the things for him that he said, what changed his tune, was when he looked at what a lot of the bold predictors, the people just fell in love with Bitcoin and just said, you know, this is the greatest thing, you’re going to miss out if you don’t invest money into it.
So they said, you know, for example, “Bitcoin bulls have claimed that Bitcoin would be used “as a currency and that the US dollar “would plummet in value.” Both those have not happened yet, but still the price of Bitcoin has continued to rise.
The other thing that he mentioned, “The Bitcoin halving in May of 2020 “would increase the Bitcoin’s price.” I’m not going to go into exactly what Bitcoin halving is but basically what the Bitcoin bulls were saying was that once this event happened, which it did in May of 2020, once that happened, that the price of Bitcoin would skyrocket.
Well, it didn’t back then. It is now, but it didn’t back then. And Nick goes on also to say, you know, well, why it’s increasing is really is because the “increased adoption and the ability “that many Bitcoin owners have to hold “even as prices rose dramatically.” And I think the other reason, too, is just that it’s just ease of access.
You know, you have so many different platforms now that you can purchase Bitcoin. Yes, I bought it through Coinbase, but I could have used Robinhood, I could have used BlockFi, I could have used, there were some other, I think We’ll also have the ability to buy cryptocurrency.
I’m wrong on that, my bad, but I just know that there are tons of platforms now that make it so much easier. So you can use your smartphone, iPhone, whatever you got, purchase Bitcoin through your phone. Like, that’s how easy it is.
Now, I mentioned at the beginning of this video that Scott Minerd had his belief or his rationale of why Bitcoin could be or should be valued at $400,000. Well, this is what he had to say as the reason why.
– [Scott] It’s based on the scarcity and relative valuation, such as things like gold, as a percentage of GDP. Bitcoin is actually, it has a lot of the attributes of gold and at the same time has an unusual value in terms of the transaction. – Now, one of the key things that Scott mentioned is the scarcity of Bitcoin.
And this is one of the things that it’s really hard for people to understand exactly what that means. But I watched this video on YouTube, of course, by the Wall Street Journal that gave a really good explanation of what scarcity means with Bitcoin. So check out this clip. – [Male] These coins aren’t limitless. Bitcoin’s founding code was embedded with the condition that there would always be a finite number of coins available.
This scarcity is what gives Bitcoin value. Right now, about 18.5 million of the 21 million maximum Bitcoins have already been mined. – In addition to scarcity, Scott also talks about Bitcoin’s valuation in relation to gold as a percentage of GDP.
And I think because right now they’re definitely a lot of people that are saying that Bitcoin is the new gold, you have to realize that the total market cap of Bitcoin is small, is extremely small compared to the market cap of gold.
Just to kind of give you an idea, right now Bitcoin’s market cap is $575 billion. And, I don’t know if this is as of today’s price, but it would have to surge to $146,000.
So the price of Bitcoin had to go to $146,000 to match the total private sector investment in gold via exchange-traded funds or bars and coins. Like that’s how different it is. Also, check out this clip that I found on the Wall Street Journal, it’s actually the same video that talked about the market cap, not just in relation to gold, but also of Apple stock.
– The total value of Bitcoin in circulation right now is around $420 billion. The value of Apple stock, just Apple, is about $2 trillion. The value of the financial market for gold is north of $12 trillion. So Bitcoin is still very small.
It doesn’t take a lot of people to come in and push the value up. The smallness of the market contributes to this sort of explosive price moves that we’ve seen. – [Jeff] And because the cryptocurrency is decentralized, there is no insurance backing it. – There are no backstops to it. It could go down to zero tomorrow and there would be nothing.
So overall, that is a lot of information on Bitcoin and the valuation of Bitcoin, but at the end of the day, chances are you just want the answer to one question. Jeff, do I need to invest into Bitcoin? Do I need to buy it now? And the answer is it depends. It really just depends. Bitcoin is a highly speculative investment.
This thing is all over the place. I mean, we’ve seen it go from $34,000 down to $30,000, just in a day or two. We’ve seen it go from $7,000 down to $30. There is nothing saying that it can’t go back down that low.
So if you’re going to invest any money into it, we definitely don’t want to invest all of our life savings. We don’t want to invest anything that we can afford. Otherwise, we do run that risk. There are no guarantees with Bitcoin. There is no FDIC insurance.
There is no SIPC insurance. There is no insurance period on this thing. So the whole blockchain market, the whole Bitcoin market, it could disappear tomorrow and any money that you invested would be gone. Now, that being said, there are tons of people investing money into this.
I think the more that we see the institutional investor, we see big investors, we see average investors putting their money in, they’re definitely onto something.
And the way the technology is going, the days of writing checks, the days of going to the ATM, especially in this type of condition of a global pandemic where we are confined to our homes, we can’t go out in public, anything that we do online just seems like it’s a more logical option.
And what I didn’t touch upon earlier is talking about the inability, supposedly, to counterfeit Bitcoin, as opposed to counterfeiting dollars and other transactions. Now, I’m sure there are so many amazing hackers out there that they can find a way to do it.
But I mean, that’s one of the supposed safety nets that cryptocurrency, that blockchain offers as opposed to traditional currency. As for me, I do plan to buy more Bitcoin. I’m not really sure what I’m waiting on.
I’m telling myself I’m waiting on another dip. I don’t know what that is. I actually missed a dip, I think was about a month or so ago, but don’t do what I’m doing.
Just don’t do what I’m doing. Do what works for you. If you think that Bitcoin is here to stay, then it shouldn’t matter when you buy it.
That’s why I tell about people that buy stocks. Like if you think that Tesla is going to be here for the next 100 years, then who cares if it’s $500 a share or $650 bucks a share. It’s about you believe in the product, you believe in the services.
Until next time, peace..
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