By Matt McCallOct 30, 2019
It’s ironic that the Federal Reserve lowered interest rates on a day I wanted to tell you about all of the excitement in a currency that’s unaffected by rates.
They’re both important, so let’s talk about each.
The Fed lowered interest rates by 25 basis points at today’s meeting, just as the market was expecting. In the press conference after the announcement, Chairman Jerome Powell said it would take a “material reassessment of our outlook” for the Fed to change current monetary policy.
In English, that means the Fed will likely continue to cut interest rates well into 2020. My educated guess is that we’ll see several more cuts in the next 12 months.
The wannabe financial experts at CNBC ran a headline that said the Fed had indicated a pause is ahead. If that’s the case, why did the yield on the 10-year Treasury fall and stocks move higher?
Let me repeat my mantra: Do yourself a favor and ignore the headlines. I do not have a crystal ball, but I do know history… and it points to more interest rate cuts ahead of the election.
Another critical number released this morning flew under the radar. Third-quarter GDP growth came in at 1.9%, above estimates but down slightly from 2% in the second quarter. I do not believe GDP is as important to the stock market as many do. However, growth near 2% is actually ideal for my bullish scenario.
There are three key takeaways from today’s numbers. I’ve highlighted all of them recently in sharing why I am all in on stocks:
My thesis is playing out exactly as expected, and stocks hit yet another all-time high today. I am not here to brag, but I am here to help you with your investments. Please take advantage of these favorable conditions and the opportunities they present.
Speaking of opportunities…
Last Wednesday, I wrote to you about my early call — given way back on July 2, 2014 on Fox News — that it was time to start seriously considering getting into Bitcoin. (You can read the article here.)
At the time, I saw the likelihood that it could become a viable global currency and act as a store of value that could weather market turbulence, like digital gold. That call was spot on.
Over the next three years, Bitcoin climbed to an all-time high of $20,089 on December 17, 2017 — an incredible run of 3,035%.
I also noted last week how, thanks to an upcoming change to Bitcoin’s supply and demand structure, I believed Bitcoin was about to skyrocket again. I’m happy to say today that I’m two-for-two.
Early last Friday, Bitcoin had suffered some selling pressure and dipped below $7,500. Traders were calling for prices to drop steeper. Some were citing a so-called “death cross” trading pattern forming, which appears when a security’s short-term moving average crosses below its long-term moving average. As the name implies, it’s supposed to foreshadow bad things ahead.
Well, that didn’t happen. In fact, it was just the opposite.
Later that day, prices jumped quickly to the $8,500 range, and then spiked higher, to over $10,000 on Saturday… and they kept climbing. (Cryptocurrency trading happens 24 hours a day, seven days a week.)
Looked at another way, over a 24-hour period late last week – and two days after I told you about Bitcoin’s merits – the cryptocurrency surged from below $7,400 to above $10,300. That 42% pop represented the third-largest single-day price gain in Bitcoin’s history.
I’d like to say I am able to peer into my crystal ball and see what’s coming in terms of Bitcoin’s prices on a day-to-day basis. Of course, I can’t — no one can. But I am able to do my research, speak to important players in the industry, and analyze why I think Bitcoin will continue to rise. In fact, I believe Bitcoin will continue to soar and make today’s prices seem like chump change by comparison. (More on that in a bit.)
I had to chuckle at what was going on in the media. People were suddenly scrambling for reasons to explain the price spike.
Many cited comments from Chinese President Xi Jinping about how the country’s massive $12 trillion economy — the second largest in the world — should focus on becoming the world leader in building blockchain technology. That’s the technology underlying Bitcoin and just about every other cryptocurrency on the market.
It makes sense, especially when you consider that before the Chinese government cracked down on cryptocurrency trading in the country, China was a global hotspot that helped launch 2017’s bull run.
And when China’s powerful government endorses a technology for its people, they take immediate notice. In fact, Chinese government endorsements of industries, currencies, or anything else often create massive wealth for smart investors.
Indeed, stocks in Chinese blockchain firms trading on the country’s exchanges maxed out their 10% daily limit on Monday – the first trading day after President Xi spoke about the blockchain.
Two days before he spoke, WeChat searches in China for blockchain and Bitcoin totaled 777,000 and 572,000, respectively. On the Friday he spoke, the same WeChat searches surged to 9.2 million and 1.3 million, respectively.
In other words, sudden mass adoption of blockchain from an enormous and enthusiastic population, while not necessarily directly impacting the price of Bitcoin per se, could spur other nations and entrepreneurs across the world. That can lead to improved cryptocurrencies, attract more investors to the space, and ramp up the network effects that bring value to any cryptocurrency, especially the world’s largest by market cap — Bitcoin.
Bitcoin has a finite limit to its supply — only 21 million will ever be created. This is critical to its long-term potential. The more people buy and use it, the more valuable it becomes.
I do think China’s moves in this space will be an important part of the picture going forward. And they probably had something to do with Bitcoin’s recent price rise — as of this writing, it’s at $9,400.
I also believe that’s not the whole story, and we’re only beginning to see what Bitcoin can do.
On Monday, for instance, Bakkt, the institutional Bitcoin futures trading service owned by The Intercontinental Exchange (ICE) – the firm behind the New York Stock Exchange and other exchanges around the world – announced that it’s planning to launch a new crypto trading service for everyday customers.
The app would let consumers use digital assets when purchasing goods from merchants. Within a year, you will be able to buy your morning latte from Starbucks with Bitcoin.
It’s just the sort of move into the mainstream that’s designed to bring more people to cryptocurrencies… and send Bitcoin soaring to new heights.
Bitcoin is just now setting up for its next big spike… and that can generate massive profits for investors smart enough to get in early.
Click here to listen to Matt McCall’s MoneyLine podcast! This week, Matt sits down with InvestorPlace CEO Brian Hunt. They debate whether Bitcoin or gold is the better asset class, and then dive into what it takes to find early stage hypergrowth companies with the ability to go up 10X. This is a cannot miss episode with two guys who have a passion for stocks like nobody else in the business.
You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.
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