Hey There Income Hunters,
As I sat down to prepare for the week ahead, I paused to consider Bitcoin’s failure last week (and the tycoon tweets that helped send it spinning).
It looks like the short-term trend has rolled over and the crypto may test its 200-day moving average below 40,000 …
The sharply rising 200-day MA does, however, provide good support at just below 39,500.
Last Wednesday — the day that Bitcoin reached a three-month low — Bloomberg reported that Robert Wearing, IRS deputy associate chief counsel, said the agency could seize crypto assets to settle unpaid taxes.
While the reminder that Bitcoin is property, not currency, in the taxman’s eyes likely spooked investors, it is in line with an previous IRS notice delivered way back in 2014.
Ultimately, I see this backup as a buying opportunity.
Institutional demand continues to rise and the need to hedge against the dollar meltdown will only increase.
And, despite erratic social media posts from Elon Musk, I think Bitcoin is heading to 250K — and higher! — in the next three years …
The Case for Bitcoin at $250K
Since its inception, Bitcoin’s price has followed a repeatable boom/bust cycle.
- We are currently in cycle #4, and if history repeats itself, the price should reach 250,000 within three years…
- During each of the first three cycles, each uptrend peaked at around an 1,800% price increase. Each downtrend reached a relatively small 70% to 80% decrease.
I broke it down into two separate charts so you can clearly see each cycle …
The vertical lines represent Bitcoin halvings. Those events, which chop the reward for mining the crypto in half, reduce the rate at which new Bitcoin enters the market and often drive prices higher.
Two Deep-Rooted Monetary System Issues Bitcoin Solves
- No Middle Man: As a decentralized network, Bitcoin eliminates the need for central banks to serve as intermediaries. Borrowers can go directly to lenders and vice versa, and the system’s protocols validate settlement of all transactions.
- Inflation Woes: There can never be more than 21 million Bitcoin produced. This eliminates the ability for reckless money printing, which devalues currency and destroys its users’ wealth.
The chart below shows how Bitcoin addresses the issue of monetary inflation. The source code for Bitcoin only allows 21 million coins to ever be mined, a number that is projected to be reached by 2140.
As you can see, Bitcoin’s inflation rate is 2% and will be below 1% in the next couple of years — compared to 24% growth in U.S. money supply today.
Bring It Home
A decentralized, non-inflationary monetary system delivers a fair and level playing field for all hard-working Americans …
And I foresee institutional investors continuing to migrate to Bitcoin, as well.
As demand increases and supply is limited, prices will continue to rise …
Bitcoin will see $250K in three years — bring it on!
Live and Trade With Passion My Friends,