Will This Bitcoin Bull Market Surprise to the Upside? with Lyn Alden
Summary
TLDRThe speaker believes the bitcoin bull market could surprise to the upside due to massive inflows from ETFs and improving economic conditions in some sectors. However, predicting the magnitude is difficult. Unlike last cycle, increased institutional investment in bitcoin itself rather than altcoins could drive further gains. The speaker views bitcoin as a long-term portfolio diversifier, protecting against currency debasement and inflation, unlike stocks and bonds which faltered in past high inflation decades. Having bitcoin to hedge inflation risk can reduce volatility and chance of insufficient purchasing power in retirement.
Takeaways
- 😀 Speaker believes bull market could surprise to upside due to massive ETF inflows, improving economy
- 😯 Speaker careful about predicting magnitude of price moves due to many variables that affect markets
- 👍 Last bull market impaired by proliferation of altcoins diverting capital from Bitcoin
- 🏦 Institutional access to Bitcoin now could lead capital to flow more directly into it
- ⚠️ Some institutions previously thought Bitcoin too risky so invested in crypto companies instead which often failed
- ✅ Blessed investment products from firms like BlackRock could shift institutional interest to Bitcoin
- 😮 Speaker believes Bitcoin bull market diminishing returns cycle likely to eventually break with a big move up
- 📈 Bitcoin works as inflation hedge in portfolios historically weighted to stocks and bonds which benefit from disinflation
- 🌡 Commodities and energy stocks also provide inflation protection but have downsides Bitcoin helps mitigate
- 💡 Speaker allocates retirement portfolio across stocks, bonds/cash, and inflation hedges like energy, Bitcoin to balance risk
Q & A
What key factors does the speaker look at to determine the direction of the Bitcoin price?
-The speaker looks at liquidity in the global marketplace and overall risk indicators to determine the likely direction of the Bitcoin price.
How did altcoins and WallStreetBets euphoria negatively impact the last Bitcoin bull run?
-The speaker believes the last bull run was heavily impaired by the proliferation of altcoins and tokens, as well as the WallStreetBets euphoria draining capital into speculative tech stocks.
Why does the speaker think institutional access to Bitcoin could lead to future price increases?
-More institutions are now able to invest directly in Bitcoin through approved products, whereas before they viewed crypto companies as less risky. This could lead to more capital flowing into Bitcoin.
How can Bitcoin help hedge a retirement portfolio in inflationary environments?
-The speaker believes Bitcoin can play a similar role to commodities and energy in hedging against currency debasement and providing a store of value during inflationary periods.
What three core asset classes does the speaker recommend for a balanced retirement portfolio?
-The speaker recommends having an equity basket, a defensive allocation like bonds or cash, and an inflation hedge like commodities, energy stocks, or Bitcoin.
Why did the speaker make a mistake investing in crypto companies instead of Bitcoin early on?
-The speaker thought crypto companies were less risky than buying Bitcoin directly, but found this was an expensive mistake as many crypto companies failed or saw prices collapse.
What are the speaker's thoughts on trying to trade Bitcoin over short timeframes?
-The speaker believes Bitcoin should be thought of as a long-term asset that shouldn't be traded over multi-week or multi-month periods by most individual investors.
How could adding Bitcoin help improve portfolio risk even if volatility rises?
-By reducing purchashing power risk and hedging against currency debasement even if price volatility increases in the short term.
Does the speaker think Bitcoin could surprise to the upside this cycle or next?
-The speaker has high conviction Bitcoin will eventually surprise to the upside, but is unsure whether it happens this cycle or the next.
What is the key benefit of using a Bitcoin IRA for retirement savings?
-A Bitcoin IRA provides tax advantages compared to regular Bitcoin investments.
Outlines
📈 Bull market outlook and Bitcoin price prediction
Paragraph 1 discusses the potential for the current bull market to surprise to the upside driven by massive inflows into Bitcoin from ETFs and improving economic conditions. It mentions the challenge of making accurate multi-year price predictions due to many unpredictable factors that could shift sentiment and capital flows. Overall it suggests the possibility of Bitcoin breaking its historical diminishing returns pattern eventually and surprising to the upside, though timing is uncertain.
😎 Constructing a retirement portfolio with Bitcoin
Paragraph 2 explains an approach to constructing a long-term, balanced retirement portfolio that includes Equities, bonds/cash for defense against disinflation, and Bitcoin/commodities for protection against currency debasement and inflation. This three-asset portfolio is robust across various economic environments. The paragraph also notes the previous mistake of investing in crypto companies rather than Bitcoin itself.
Mindmap
Keywords
💡Bitcoin
💡inflation
💡portfolio
💡fiscal policy
💡institutional investment
💡bull market
💡volatility
💡altcoins
💡cycle
💡hedge
Highlights
There are various indicators to see how set up is the risk profile overall for Bitcoin
Trying to predict a Bitcoin price target years out is very challenging due to key decision makers that could significantly affect what happens versus does not happen
The last bull run was heavily impaired by the altcoin space funneling demand into other parts of the market until exuberance was exhausted
Institutional access points can now pour capital directly into Bitcoin rather than altcoins
Retirement money previously thought Bitcoin too risky so they bought crypto company equity, which ironically tended to blow up worse
With blessed Bitcoin products and BlackRock marketing, institutions may now tilt towards owning Bitcoin itself
Bitcoin's diminishing returns cycles over history will likely break at some point, possibly surprising to the upside
Bitcoin is a long-term asset - unless a professional trader, don't think about multi-week price action but rather performance over full cycles
In inflationary periods, commodities and energies historically performed well, and Bitcoin fits into this camp of assets that can hedge inflation
In uncertain environments, construct portfolios with equities, bonds/cash against disinflation, and Bitcoin/commodities against currency debasement
High volatility assets like Bitcoin can reduce portfolio risk by protecting against insufficient purchasing power at retirement
Last cycle the mistake was investing in crypto companies instead of Bitcoin, which was higher risk
Consider allocating real Bitcoin through a provider like Swan Bitcoin in a tax-advantaged IRA
The altcoin space impaired the last bull run by funneling demand away from Bitcoin
Institutions can now pour capital directly into Bitcoin rather than risky altcoins
Transcripts
with all the Catalyst that we have
upcoming we're talking about the having
the massive net inflows from ETFs and so
forth and maybe you know the economy
looking better in some sectors like you
pointed out than others um including
kind of fiscal policy and fiscal
stimulus um do you think that this bull
market could surprise to the
upside I certainly think it could um I I
try to be very careful with magnitude um
predictions I I tend to have an opinion
around Direction in a any given period
of time because there's various kind of
correlations you could look into you
know is liquidity in the global
Marketplace going to be good or bad
because that tends to impact Bitcoin um
you know there's various indicators I
look at to kind of see how how kind of
set up is the risk profile overall um
but trying to predict a price Target a
year or two out is a very challenging
Endeavor because there's there's kind of
key point points that could affect you
know kind of key decision makers that
could affect significantly what happens
versus does not happen I think the last
um Bull Run was heavily impaired by kind
of the altcoin space um as you know even
though Bitcoin itself has fixed Supply
as more and more demand poured into the
space you had no shortage of people
willing to make tokens and make jpegs
and make things and kind of funnel them
into other parts of the market until
they kind of fully exhausted the
exuberance that was also you know
combined with Wall Street bets
um kind of euphoria around um you know
Innovative tech stocks kind of the arc
style um portfolio and so there are a
lot of different places all at once for
Capital to kind of pour into until it
exhausted itself um should we get kind
of a um now that we have an
Institutional access point right that
there's there's more institutions that
can pour into Bitcoin that is is
unlikely to pour into um most other
altcoins um uh that we should see kind
of more interest in addition there is a
a a phase where ironically longer term
retirement money kind of had a mandate
that where they thought Bitcoin was too
risky so they would buy Equity of um you
know quote unquote crypto companies
thinking that you know they understand
Equity they they view that as kind of a
safer bet but then ironically those are
the things that tended to blow up way
worse or in some cases were outright
fraudulent um now that there's kind of
blessed products and now that there's
black rock marketing behind it um I I
think we probably would see a tilt more
towards some of these uh large
institutions being willing to own
Bitcoin itself um so I I certainly I
certainly think that the deminishing
return cycle that we've seen over
bitcoin's history is likely to break at
some point um I don't have a high
conviction if it's this cycle or next
cycle um but I would expect it to
probably eventually kind of surprise to
the upside one of these times um and as
far as kind of My overall retirement
road map the way that I think about this
the you know the the advantage of
Bitcoin is that it is is a long-term
asset in the sense that you know unless
you're a professional Trader you
probably really shouldn't be thinking
about you know multi-week multi-on price
action and instead it's what does it do
over course of of one or more kind of
full Cycles um in the asset which is the
kind of thing you think about in longer
term retirement portfolios and so over
the past 40 years or so until uh kind of
this this recent few years the the
developed world's been in this
structural disinflationary Trend and the
types of portfolios that do well in that
environment are basically all of the
assets that benefit from disinflation so
large cap equities bonds and when you
combine those together you know during
economic expansion stocks do well when
economic contracts uh the bonds take the
edge off the problem is that when you
kind of enter more fiscal dominant type
of situation or a situation where
inflation is on average running hotter
right so the 1970s an example the 194
40s an example and a less extreme
example would be the 2000's decade um
but when you run into kind of a longer
period like that stocks and bonds become
less attractive at hedging each other
generally bonds are less likely to go up
when stocks go down or bonds bond yields
going up meaning bond prices going down
could even be the reason that Equity
sell off sometimes um because now that's
kind of changing the the the discount
rate that that you value equities at and
so in those types of Environ
historically things like Commodities and
energies were were kind of the the one
area that an investor could turn to to
add to their portfolio and instead of
having a two-part portfolio they could
have that three-part portfolio which
which can really kind of hold up better
and hedge them better but of course now
we have tools like Bitcoin as well and I
kind of put it into that third Camp
which is assets that can do quite well
in a more inflationary period in a more
fiscal dominant um type of period but
they can of course also do quite well if
you know just overall asset prices
continue higher as well so the way that
I think about constructing a long-term
portfolio and this type of you know very
uncertain environment and especially one
where I'm kind of trying to keep
volatility to you know somewhat uh in a
reasonable range I'm thinking okay
here's an equity basket um I'm thinking
okay here's like a defensive kind of
hedge against kind of disinflationary
moments things like cash or you know
certain durations of bonds for example
and then I think okay what is the
protection against um currency
debasement what is the protection
against these other things and that'll
be things like energy stocks or things
like Bitcoin um that I think really kind
of round out that portfolio and actually
help even though some of those assets on
their own can be highly volatile they
can actually reduce the risk of a
portfolio basically by and by that I
would mean not you know sometimes it can
reduce the volatility but it can also
just kind of reduce the chance that your
purching power is insufficient um by the
time you reach uh
retirement thank you for that I actually
made the same mistake that some people
you mentioned did last cycle about
allocating the crypto companies instead
of Bitcoin when I first got started in
Bitcoin I invested in Bitcoin startups
thinking that that was lower risk than
buying Bitcoin itself and that was a
very expensive mistake so I hope people
listening consider not advice but
consider just
Bitcoin a real Bitcoin through Swan with
less tax and put that in your IRA tax
advantage
[Music]
Bitcoin
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