Bostoncoin update June-July 2024
Invest when there is blood in the streets
Readers with a few grey hairs may recall the Microsoft antitrust trials late last century, where Bill Gates was accused of running a monopoly, and stifling rival businesses such as Netscape Navigator. The US District Court stated that Microsoft should be split up into different companies, Bill Gates threatened to leave Microsoft and the MSFT stock price fell from $58 to $24.
With hindsight, we know that the situation has been resolved, and MSFT stock is now over US$300. Microsoft investors who sold out when things looked grim would have lost over 50% of their money. Those who bought the dip would have made over 1300%.
The 1999 Microsoft antitrust case may have some parallels to 2023 cryptocurrency markets. As the US Securities Exchange Commission (SEC) used a 100-year-old precedent to claim that over sixty cryptocurrencies should be classified as securities, prices fell on popular cryptocurrencies and associated crypto stocks.
Binance, the world’s second-largest crypto exchange has exited Canada, citing regulatory concerns, and is facing an SEC lawsuit. Stock in rival crypto exchange Coinbase is down by half last year, and many cryptocurrencies on the SEC hit-list have dropped significantly.
With massive crisis comes massive opportunity, as some will know. Whilst uncertain investors are selling out of crypto and related stocks, the smart money is buying the dip and holding.
Cathie Wood’s ARK investment fund has purchased more than US$20 million worth of stock in Coinbase this month whilst it is selling for a 20% discount. If it dips lower she may buy even more. ARK also bought the Bitcoin dip, investing another $3 million into the Grayscale Bitcoin Trust, whilst (MicroStrategy’s) Michael Saylor and (SharkTank’s) Kevin O’Leary bought plain Bitcoin. The Bostoncoin funds are still buying and will continue to do so.
Investors know that past performance is not an indicator of future outcomes, and there are no guarantees that any cryptocurrencies or crypto brokerage stocks will bounce back 1000% like Microsoft. Still, history has been known to echo, if not repeat.
The Microsoft antitrust case took almost three years to resolve fully, and at present, there appears to be no timeframe for the SEC’s crypto crackdown. However, savvy investors with deep pockets believe things will recover, even if they do not know when.
An SEC backflip, in five, four, three, two…?
The hashtag #FireGaryGensler was trending on Twitter during June, and a couple of US senators have called for the dismissal of the SEC chair, claiming his crypto crackdown is damaging to the USA, its economy and its future as a technology hub. Our secret sources indicate that around 70% of the US crypto companies are moving to relocate their headquarters to crypto-friendly regions such as Hong Kong, Dubai, Singapore, the UK or the EU.
But wait: maybe the SEC will backflip and suddenly decide that BTC is A-OK. Why would they do that?
Because Blackrock has more money than the White House and can make large campaign contributions.
Blackrock, the $10 Trillion asset manager, has applied a Bitcoin spot-ETF, a mutual fund that invests in Bitcoin, so ordinary investors can access Bitcoin without having a crypto wallet.
For a few years now, Grayscale has been running a Bitcoin-ETF which has not raised the ire of the SEC, but the Grayscale fund is “Bitcoin-adjacent” and does not hold any Bitcoin. Instead of holding actual Bitcoin, the Grayscale fund has a complex array of options, so that it can buy BTC if it wants to, but does not have to, and the price is often illiquid, less than BTC actual price or locked up for 90 days at a time.
In contrast, the Blackrock fund will buy actual Bitcoin and hold it on behalf of fund investors, similar to how you can invest in a gold fund that buys and stores actual physical gold on your behalf. This is a major step up from the Grayscale option, and if approved, will open the floodgates for many more institutions to purchase Bitcoin and hold it for ordinary investors.
Following on the heels of Blackrock, companies such as Wisdom Tree, Invesco, Fidelity, Citadel, Schwab, and Deutsche Bank have all applied for similar BTC funds.
Ignoring all the ‘also-rans’, if we look at Blackrock and assume that 1% of its investors would like to hold Bitcoin, that will be $100 billion entering the crypto markets. That is a big number, and now you know why we only counted Blackrock, not the others. We do not wish to overhype the opportunity.
There may be a chance that 1% of Fidelity investors would want in also, which would make the number a lot larger, or there may be only half of 1% of Blackrock investors who want crypto, in which case the figure would be lower.
This puppy does not have crystal balls, so we cannot promise an SEC backflip, nor can we promise the floodgates of Wall Street cash will propel crypto markets to massive all-time highs in the next year or two, but markets have risen just on the possibility. Stay tuned to see if the news eventually matches or exceeds the hype.
Keeping it in the family
Whilst the SEC and CFTC have been arguing over whether crypto is a commodity or a security, the former head of the CFTC has just joined a crypto company. Interestingly, the ex-CFTC head is a commodity expert (think gold, silver) and is now working for Circle, the company that makes printable or mintable USDC digital dollars. When people jump from old-school regulators to future innovators, maybe it shows a change in the tides.
Despite being sued by the SEC, publicly-listed crypto brokerage CoinBase has “no plans” to delist crypto assets and will continue “business as usual”. Seeming to disregard its SEC lawsuit, the popular US crypto exchange is listed on the stock exchange, where its stock price is up over 80% for the last six months.
According to researcher Goldman Sachs, many more institutional investors are piling into crypto, not just household names like Blackrock and Fidelity. Private Family investment houses have reported almost doubling their crypto holdings, up from one in seven during 2021 to more than one in four in 2023.
Sex with the ex?
Some of you have been there: no judgement. You like someone, you get together, then you split up, and you hate them, and then months or years later, you get drunk and send the “hated” person a text, and it’s all back on again…
Let’s have a brief look at those who claimed to hate crypto and then “got into bed with Bitcoin”:
Then: Larry Fink, CEO of Blackrock: once said, “Bitcoin shows you how much demand for money laundering there is”… “Bitcoin is an index for money laundering – that’s all.” In 2018, Fink said, “None of Blackrock’s clients are interested in buying crypto”.
Now: Blackrock applies for the world’s first Bitcoin spot-ETF.
Then: Ken Griffin, Founder of Citadel Finance: called crypto a “Jihadist call” against the dollar and that he “wished young people would use that energy to make the US dollar stronger instead”. He also said, “People who own crypto are stupid”.
Now: Claims that crypto is one of the greatest financial stories of the last 15 years. His company just launched a new crypto exchange.
Then: Walt Bettinger, CEO of Charles Schwab: in 2021, he was “cautiously” looking at crypto markets and was “waiting for regulatory clarity”.
Now: forget waiting; he has just launched a new crypto exchange.
Watch where the wind is blowing. It may be time to catch up with your previously sceptical friends and give them an update. Crypto is catching on at the very highest ends of Wall Street. You and all your friends may want to be on the train now.
High-end buying of cryptocurrencies
Last month we reported that luxury car company Mercedes was getting into NFTs. Now we find that handbag maker Louis Vuitton (LV) has created virtual luggage, at a price of over US$40 000. Anyone who buys the digital luggage NFT will receive its real-life copy, as well as a later opportunity to purchase digital keys.
The virtual LV keys will be released periodically and unlock a hidden compartment of the digital bag, along with a physical copy of the bonus item. It seems like a “pass the parcel” game for grownups, or an Advent calendar, but you must pay to open the next part.
Those who carry generic unbranded luggage or have little faith in airline baggage handlers will probably avoid the LV entry into the cryptosphere. Still, we are sure a few diehard LV fans will go all in for the surprise offering.
In somewhat more tempting news, fans of shiny wrist adornments can now buy a TAG Heuer watch with crypto. It now seems a criminal act that Laszlo traded 10 000 Bitcoin for a couple of pizzas, as the pizza was promptly eaten and gone, and the Bitcoin is now worth over $250 million. Aside from a TAG looking much better on your wrist than old pizza stains, sometimes luxury watches, just like Bitcoin, can also increase in value.
For those who think hanging a $50 000 Tiffany & Co diamond off your neck is no longer cool, Tiffany & Co have introduced real-world versions of the Crypto Punk NFTs. Yes, the (allegedly) boxy, ugly and largely unnecessary artworks can now have their physical twin made from precious jewels and do more to show off your wealth than your CryptoPunk Twitter profile picture. No, we will not buy these as we consider them ugly and useless, but it’s good to know that Tiffany, a company founded in 1837, is now making inroads into crypto. Shine on, you crazy diamonds.
Meanwhile, a US life insurance company will pay out death benefits in Bitcoin. It may be a morbid topic, but sooner or later, we will all take a long dirt nap. Nobody wants to die prematurely, but if you want your dependents paid out in growth crypto rather than devaluing cash, you can apply online.
How are we doing?
As the excitement grows around Blackrock, Fidelity, Wisdom Tree et al, prices are moving predictably higher. Headliners Bitcoin and Ethereum are up 62% and 84% for the past twelve months, whilst newcomer Injective is up 50% in just three months. Our investments in Polygon are up 60% and Quant up 210%.
We understand that some like to take the DIY-route, so we give away our research and methodology, and your DIY friends can stay safe.
Hot tip: ignore all the TikTok crypto advisers, Youtube bobbleheads, clickbait headlines, and thumbnails that say “this coin will make billionaires” or “five coins that will 100x”. Most of the online commentators are misinformed, wrong or downright dishonest.
Most YouTubers get paid for people watching their antics (thanks Jim Cramer), not for making good investments. Worse, they often sell what they are telling you to buy.
Just a handful of the people who have been charged for trying to mislead, scam or shill crypto investors include Tron founder Justin Sun, celebrities Lindsay Lohan, Jake Paul, Kim Kardashian, boxer Floyd Mayweather, John McAfee (RIP) and Ben Armstrong, also known as “BitBoy” on Youtube.
Researching crypto takes time and effort. Telling people about “the next big thing” when you have been given a million coins for free takes zero talent. Be careful.
Most people are far too busy to research (there are now over 24 000 cryptocurrencies on the market!), and that’s why we created the world’s first crypto mutual funds; we take care of your investments and you take care of your life.
We have bought and sold tens of thousands of coins over the last seven years, with no celebrity help, zero scams, no FTX-style Ponzis, zero rug pulls and no coins that went to zero. You’re welcome All we ask in return is for you to tell your friends about us. That way, you can share the wealth with your loved ones, and we don’t have to waste money on advertising.
How to win friends and influence people
In 2012, before most people had heard of crypto, Bitcoin made gains of 1 235%.
In 2016, when crypto was starting to be spoken about at a few nerdy gatherings, Bitcoin gained 5 267%.
In 2021 whilst many people were panicking about the pandemic, Bitcoin soared another 1 356%.
Yes, after every eye-watering gain, there has been a pull-back in crypto markets, just as there have always been crashes in property, stocks, bonds and other investments. But if something goes up 1000% and then crashes by 50%, you have still made good money (if you got in early and not late).
We are now at a time where there is much uncertainty around crypto regulation. Yet, billion-dollar and trillion-dollar investment companies are still entering crypto markets.
Whether the SEC backflips and the USA becomes a crypto-nation, or whether the SEC blocks innovation and the trillion-dollar tsunami flows into crypto-friendly regions in Asia or Europe, the rising tide that lifts all ships is coming.
We can guarantee nothing about prices, gains, regulations, or market movements in the next 12 to 18 months. We can, however, guarantee that there will be numerous members of your friends and family who will find out about the gains after they have occurred. Do not be the person who gets the message from your friends and family, “Congratulations on making XXXX% in crypto… Why didn’t you tell me?”
Reaching the top of the mountain is so much better when you have a few friends around to share the view and the victory. Forward this newsletter to anyone you care about. Share it on your social media. Tell your friends and family that investing in crypto can be safer and simpler with Bostoncoin. Tell them now before the even bigger boom begins. We will see you at the top of the mountain
June 30 2023
BOS NAV AUD 61.4286253
BOS Price AUD 67.5714878
BOS NAV USD 42.0188028
BOS Price USD 46.2206830
June 30 2023
DART NAV AUD 75.4028379
DART Price AUD 82.9431217
DART NAV USD 51.5775335
DART Price USD 56.7352868