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Bitcoin Guide: Part 3 – Bitcoin compared to other assets

Bitcoin Guide: Part 3 – Bitcoin compared to other assets

            How’s Bitcoin doing lately? Maybe you started wondering because someone who you know was very, very successful at investing in Bitcoin. Bitcoin remains firmly ahead of gold as the best asset class on a YTD basis. Bitcoin outperformed the S&P 500 in 2019, one of it’s best years in a generation, by about three fold. Wait is that a mistake? No, it is not. Not only is it not a mistake, but Bitcoin’s performance in 2019 was its fourth worst annual performance (less than average for an asset with a life of about 12 years). This is why we are interested in Bitcoin, we believe it is one of the best risk assets you can own in your portfolio and we recommend going OW compared to its typical slice of the investment assets pie. We realize some investors may have been spooked from the massive 50% drop that occurred during the worst days of COVID-19. The market infrastructure and demand impressively weathered that hit and bitcoin exchanges are functioning healthily again. We told our members to buy when the price of bitcoin was around $5,000, those who did have seen a significant retracement of the loss. Investing in Bitcoin is not necessarily for the faint of heart, but to those willing to brave the volatility, there have certainly been better rewards for that risk than in any available asset class. This asset has some serious risk-adjusted return.

Bitcoin Guide: Part 3 - Bitcoin compared to other assets

We are the first, and currently only, independent analyst on Wall Street to cover cryptocurrency. If you want to invest in Bitcoin, then our research is a great place to give you some of the crucial information you will need. We obviously believe in both the current, and long-term value of it as an investment. We cover the entire asset-class from Litecoin, Ethereum, bitcoin mining developments, bitcoin price targets, and when to buy and sell bitcoin. With that being said, it is a very difficult market to navigate and has many unique rules unto itself that we work hard to identify and provide to our subscribers. We have some members that only trade cryptocurrency, and we have other members who may be looking to it as a new and exciting asset to add to their portfolio for diversification. So, don’t give your financial advisor heartburn and make him do any more extra work. This is not an easy asset class to navigate.  Let us help your cryptocurrency investment be the star of your portfolio. We can help you invest in Bitcoin and other blue-chip crypto assets. We have unparalleled expertise and experience in the space.

The Triffin Paradox and the dollar as global reserve currency

            Nixon was trying to fix what had become a persistent problem with the Bretton Woods agreement of 1944, a structural problem known as the ‘Triffin Paradox’. This is the natural tendency of nations who have reserve currency status to have inherently conflicting interests between it’s short-term domestic political objectives and the objective of long-term international financial stability, and retaining reserve currency status. Foreign nations constantly needed excess supplies of our currency as the network effect of the dollar, and it’s central role in global commerce was cemented by American-funded economic expansion and rebuilding in the wake of the War. This led to a situation where dollars in circulation necessarily exceeded gold in US reserves. What we now look back on as the ‘Great Inflation’ had then begun in 1965 and wouldn’t end until 1982. One of Nixon’s intentions ironically was to curb inflation, which he did in a crude way for the first time not during a major war, by implementing wage and price controls, which shortly thereafter failed miserably. It is likely, due to the large levels of government stimulus and continued bent of government preference toward inflating away debt that the dollar will continue to lose value for the foreseeable future. Many see investing in Bitcoin as an alternative to buying gold as a countercyclical hedge against fiscally wayward government policy that seems to have no end in sight. 

 The role of the dollar as global reserve currency was under threat. Keynes had predicted the imbalances problem and suggested an internationally sanctioned, stable reserve currency called the Bancor. Many Bitcoin enthusiasts may be surprised by this. The tension between a national political agenda and long-term financial stability of the international system creates a potential for political abuse of the reserve currency status. Fiat currency, many theorize, only exacerbates the potential for political abuse and inflation that can cause serious social and political problems if unchecked. The political machinations involved with this momentous decision surely make some of our crypto enthusiasts cringe.  

Quick Navigation on this series

Bitcoin Guide: Part 1 – Bitcoin Investing: Is Bitcoin a Good Investment and How Much Should I Invest in Bitcoin?
Bitcoin Guide: Part 2 – What is All The Hype About Bitcoin?
Bitcoin Guide: Part 3 – Bitcoin compared to other assets
Bitcoin Guide: Part 4 – Bitcoin and inflation, how is Bitcoin related to inflation?
Bitcoin Guide: Part 5 – Cryptocurrency investing in modern portfolios
Bitcoin Guide: Part 6 – Bitcoin as a Store of Value
Bitcoin Guide: Part 7 – The Bitcoin Halving and its impact
Bitcoin Guide: Part 8 – Is Bitcion a Risk On Asset or is Bitcoin a Risk Off Asset?
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