By Matt McCallJan 09, 2020
Even if you never took a class in economics, you can get pretty far in analyzing the global markets just by keeping this concept in mind:
This is the supply and demand curve.
The graphic illustrates how prices fluctuate based on how much people are buying and selling. And it’s not just something that you’d see a professor draw on a chalkboard. It plays out in the markets every day.
Look what happened to the price of oil this week. In the past week, crude oil futures shot up as Iran and the United States traded missile attacks in Iraq (threatening the country’s oil production and worldwide supply). Now oil futures are right back down again after tensions seem to have eased and Wednesday’s report that crude oil inventories in the United States are on the rise.
The problem for investors is that, well, those out-of-the-blue headlines are hard to predict. But you can make money if you act BEFORE a market-moving event hits.
It would be nice to know when they are going to hit… and that’s exactly the opportunity we have with cryptocurrency right now.
It might sound odd to talk about the supply of a digital currency. Demand, sure. That’s to be expected as this innovative new currency goes mainstream.
But, in fact, cryptocurrency supplies ARE limited – because its creators know that’s its key benefit compared to “fiat” currencies (like the U.S. dollar, the yuan, and the euro). Governments know that they can spend as much as they want… as long as they print enough money. But then the currency gets totally debased. Imagine Germany after World War I, when children had to push wheelbarrows full of cash to the store to buy bread. The situation in Venezuela today is eerily similar.
But cryptocurrency isn’t controlled by a government or a bank… or any human beings at all. It runs on a computer program. And in this program, the total supply is capped. It’s hard coded in the software. For example, there will only ever be 21 million bitcoins… EVER.
Now, bitcoin’s been around longer than most people realize – more than 10 years. And 80% of bitcoins have already been “mined.”
But as more people learn the benefits of cryptocurrencies, their appetite will only get larger. So what happens as people work through that remaining 20% of bitcoins? As the demand increases and quantity decreases, prices rise!
But first, those bitcoins have to be mined.
And “miners’” incentive to do so is about to take a hit.
It’s an event called “the halvening.” And, as I explained in Tuesday’s 2020 Crypto Millionaire Summit, it’s happened before:
Every 210,000 “blocks” of bitcoin transactions – or roughly four years – the payment miners get for mining bitcoin gets cut in half. (That way, we won’t burn through that remaining 20% too quickly.)
Right now, a miner receives 12.5 bitcoins for mining one block.
But soon, this figure will be cut in half, so miners will receive only 6.25 bitcoins for a block.
Now, going from 12 to six bitcoins as a reward for miners might not sound like a big deal…
But just consider what happened during the first halvening, when the reward went from 50 bitcoins to 25 – it created the bitcoin boom of 2013:
Then during the second halvening, when the reward went from 25 bitcoins to 12.5, we saw another boom:
The supply of bitcoin will get even smaller with the next halvening in 2020… just a few short months away.
And there’s something else that happens with each halvening of bitcoin: newer cryptocurrencies skyrocket.
In 2012, for example, when bitcoin’s first halvening kicked in, other cryptos – known as altcoins – were just starting out. Because of that, their prices grew exponentially faster than bitcoin itself, as more and more people rushed into the cryptocurrency market.
For example, toward the end of 2015, the first halvening was still going on, and bitcoin jumped 72%. Not bad, for sure. But one altcoin called ethereum (ETH) jumped 1,941%!
Those are the moments we never forget – when we make incredible money in a short time.
But, as investors, we’ve also got to think big picture…long term.
The good news is that the big picture for cryptocurrency investing is VERY big.
As I’ve mentioned here in MoneyWire, when you invest in crypto, it’s not quite like investing in other currencies, or even gold. You’re really investing in software.
Just like Microsoft (MSFT) Excel… Google (GOOGL)… Uber Technologies (UBER)… Facebook (FB)… eBay (EBAY). And all the other computer programs that have generated TRILLIONS of dollars for their investors.
Blockchain is about to unleash a trillion-dollar tsunami of wealth because despite all the advances we’ve made over the past few decades…
But blockchain transactions are simple, elegant, and practically impossible to hack.
The more they gain in popularity, well… the sky’s the limit.
All you have to do in the meantime is buy the right cryptocurrencies. And the impact on your portfolio could be 100 times greater.
That’s why I’ve developed a 10-point system for picking cryptocurrencies. Tomorrow, we’ll start looking at the principles behind that.
In the meantime, be sure to catch the replay of Tuesday’s 2020 Crypto Millionaire Summit while it’s still available and get in on the action.
P.S. The biggest and fastest gains won’t come from just ordinary bitcoin tokens.
There’s a much lesser-known cryptocurrency that is positioned to grow even higher.
If you missed out on bitcoin’s fantastic run-up in 2013 or 2017, today is your second chance at positioning yourself for life-changing cryptocurrency profits.
I’ll get you started with information on the special cryptocurrency event that’s coming, and set you down a path to make more money than from any other investing you may have ever done. Click here to get the details.
Click here to listen to Matt McCall’s MoneyLine podcast! This week, Matt discusses Thursday’s drone strike that killed a top general in the Iranian military, which sent stocks lower as safe haven investments rallied. Then, he looks ahead to the next 10 years – what he is calling the Roaring 2020s. One sector poised for a big transformation is transportation. Finally, learn about investing in electric vehicles and self-driving cars.
You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.
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