Will This Bitcoin Bull Market Surprise to the Upside? with Lyn Alden

Summary

The 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

00:00

📈 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.

05:02

😎 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.

Keywords

💡Bitcoin

Bitcoin is a decentralized digital currency and payment system that uses cryptography and a public ledger called the blockchain to verify and record transactions. The video discusses Bitcoin as a long-term investment asset that can act as a hedge against currency debasement and inflation.

💡inflation

Inflation refers to the general increase in prices and fall in the purchasing value of money over time. The video suggests Bitcoin can be useful for protecting one's purchasing power during periods of higher inflation.

💡portfolio

An investment portfolio is a collection of assets owned by an individual or institution. The video talks about constructing a balanced retirement portfolio with stocks, bonds and alternative assets like Bitcoin.

💡fiscal policy

Fiscal policy refers to government spending and taxation decisions to influence economic conditions. The video mentions fiscal stimulus could drive further gains in financial markets.

💡institutional investment

Institutional investment refers to assets invested by large organizations like pension funds, insurance companies and asset managers. The video suggests increased institutional investment could drive the next Bitcoin bull market.

💡bull market

A bull market refers to a period of generally rising asset prices. The video discusses whether the current Bitcoin and stock market bull run could continue with higher gains.

💡volatility

Volatility refers to the degree of variation in the price of an asset over time. The video talks about balancing volatility across an investment portfolio.

💡altcoins

Altcoins refer to cryptocurrencies other than Bitcoin. The video suggests demand shifting into altcoins may have limited gains in the last Bitcoin bull run.

💡cycle

Market cycles refer to alternating periods of rising and falling asset prices. The video talks about Bitcoin price trends across market cycles.

💡hedge

A hedge is an investment to reduce the risk exposure in the rest of a portfolio. The video discusses Bitcoin's potential to hedge against currency devaluation and inflation.

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