Turn Over Your Keys or Else…
Were Bitcoin a company, it would be the 7th largest in the U.S.
Worth over $800 billion, the value of the total Bitcoin supply puts it right behind Facebook (Meta) and ahead of Berkshire Hathaway. It also exceeds the market value of Ethereum, the next biggest crypto currency, by more than double.
So, Bitcoin is big.
And in a few years, it’ll be even bigger.
Just how big is anyone’s guess. Bitcoin at $100K or even $200K wouldn’t surprise me.
However, Bitcoin’s success at money – both past and future – makes it a threat. Especially to governments that draw all political power from the exorbitant privilege of fiat issuance.
And with so many investors flooding into Bitcoin through centralized exchanges or other institutions beholden to regulators, those same governments now have an easy target.
They can’t destroy the network. But they can beat down the price.
And this is how they’ll do it…
Bitcoin’s Soft Underbelly
Bitcoin was built so you could be your own bank.
Through wallets and private cryptographic keys, you control your holdings. And for those that take the right steps, you can own it anonymously.
But how many crypto newbies control their own keys? How many institutional investors – the recent flood of which did the most to drive Bitcoin above $60K last year – do you think mess with wallets?
The answer – very few.
Coinbase, Gemini, and many other crypto exchanges control the keys. Your ownership in whatever crypto you hold through them is nothing more than an accounting entry. And the institutions that do bother to manage cryptocurrency wallets on behalf of their clients still do so at the favor of government.
Which makes Bitcoin an easy target.
They don’t have to geofence the network. They don’t have to coordinate a 51% attack. They don’t have to flood the mining process with processing power, ramping up the difficulty so high that all other blockchain confirmations become impossible.
All they need do is ban Bitcoin and those exchanges, custodians, and institutions will tuck tail and run. These are the weak hands of crypto. “Turn over your keys or else” would be their master’s call. One they would all heed.
And weak hands make a weak price.
Besides, it wouldn’t be the first time the U.S. government seized money in the name of “national interest”. They did it with gold. And they can do it with Bitcoin.
Bitcoin’s elegant moneyness makes it stiff competition for the U.S. dollar. And the government hates competition.
But there’s a way to CYA on Bitcoin’s price while simultaneously building your own, immutable, anonymous bank.
A Strong Hand in Crypto
Bitcoin futures trade on the Chicago Mercantile Exchange. There’s also an ETF that owns Bitcoin futures – Proshares Bitcoin Strategy ETF (NYSE: BITO). And options trade on both.
So, you can hedge the downside risk to Bitcoin, or simply go outright short, through puts on either.
Personally, I’d go with way out-of-the-money puts. Pick a strike price a couple of months out and roll them to keep your hedge in place.
That way you can build up your bank of Bitcoin while not fretting about the price. Buy that Bitcoin with the proper precautions, and the only one that will know about your bank is you.
That’s how to play crypto with a strong hand.
But you can be more aggressive. The weak hands in crypto aren’t just weak in the face of government threats. They are weak because they view Bitcoin as a speculative plaything. Not a revolutionary force that will outlive fiat.
Speculators don’t stick around for the long-haul.
And once the revolution is over, there will be only one coin. And that coin will be that Bitcoin.
Call Me a Bitcoin Maximalist
The Cryptoverse doesn’t need 1,000s of cryptocurrencies with every smart contract running off its own token like we’ve seen on Ethereum. With the lightning network, Taproot upgrade, and other advances like Slashtags, Bitcoin can provide all the smart contract functionality of Ethereum.
And all you need to power them is Bitcoin. That’s the real bull-case.
To build your Bitcoin bank the right way while also hedging its bare underbelly, join me over in Telegram. I’ll help you trade it and show you how to keep it.
Because when Uncle Sam decides to get really aggressive, you’ll want to have one foot already in the exit.
P.S. For help getting started with Telegram, click here to download the guide we put together for you.
