Bitcoin Letter Archives

Bitcoin Holds Steady

After Bitcoin’s asymmetric rise to $65,000, the pullback to $45,000 has been hard on all of us.

The momentum sucked out of the asset shows how fortunes can turn on a dime, but that doesn’t mean the price of Bitcoin is dead, it’s just resting.

Without pussyfooting around, the truth is that Bitcoin is highly volatile which is why I do not encourage readers to bet the ranch on it at any moment in time or on any sort of cryptocurrency.

Even the use case of it is constantly attacked almost similar to when Tesla wasn’t Tesla yet and many emerging asset classes but go through teething pains before they mature.

The bottom line is that as volatility increases, the potential to make more money quickly also increases.

Conversely, the bad news is that higher volatility also means higher risk.

When elevated volatility consumes asset prices, the possibility for above-average profit is squarely on the table, but you also run the risk of losing a larger amount of capital in a relatively shorter period of time.

That being said, it’s salient to take measure of what’s going on beneath the surface in order to take a barometer of the health of the industry development.

We aren’t in the business of buying apartment buildings with tofu-like foundations.

This disciplined approach will help you successfully navigate higher volatility asset classes and manage volatility for your benefit—while minimizing risks.

Beneath the surface, the quantity of Bitcoin (BTC) held by private corporations increased significantly during 2021, improving on the 2020 signaling a maturing of the asset class.

Many fortune 500 companies and a smattering of other public companies have scooped up significant Bitcoin purchases and are highly exposed to Bitcoin on public equity markets.

They mainly do this by buying newly minted crypto ETF’s which there are an ever-growing number of choices even though some have chosen to buy directly from crypto brokers.

This isn’t the Bitcoin of 2 years ago, things have moved on quite drastically.

And I am not just talking about MicroStrategy (MSTR) who have been outspoken about their commitment to the digital gold.

MSTR has also been a huge supporter of online seminars aimed to explain the legal considerations for firms seeking to integrate Bitcoin into their businesses and reserves.

As you see, not all companies use Bitcoin the same way, and public corporations are increasingly viewing crypto as contained to only one part of their balance sheet.

For some, they have made it their entire balance sheet on the backs of corporate bond issuances.

This is of course never happened 2 years ago.

CEO of MSTR Michael Saylor’s is a leading business intelligence firm and is known for being particularly bullish on Bitcoin, owning almost $6 billion in crypto assets.

MSTR just bought another 1,914 Bitcoin worth $94 million. The company has gained more than $2.1 billion in profit since its initial Bitcoin purchase in August 2020.

The data shows that digital currency asset management company Grayscale, a de facto bitcoin ETF and proxy of Bitcoin, had gained the highest market share by a landslide at 645,199 Bitcoin by the end of 2021. This took up 71% of the wider market as holdings of all spot ETFs and corporations together totaled 903,988 Bitcoin according to the chart.

MicroStrategy is the largest corporate investor, holding 124,391 Bitcoin valued at around $5.8 billion, according to Bitcoin Treasuries. Second-placed Tesla holds around 43,200 Bitcoin worth roughly $2 billion at current prices.

In 2020, the amount of Bitcoin held by public companies surged 400% in 12 months to $3.6 billion and 2021 showed more inroads while 2022 is poised again to shatter records.

Internally, Bitcoin and cryptocurrencies as a whole are making the right moves to consolidate this asset class as a legitimate industry whether it be DeFi apps or the growing adoption rate.

I see more public companies participating in Bitcoin as a resounding vote of confidence for the currency and this will put the asset in good stead for the long term.

For the short term, the signaling of higher interest rates has really put the kibosh on the price of Bitcoin, but that should be priced into the equation at this point.

The Fed then moving not as fast to raise could offer crypto that narrow path to higher prices.

At the very minimum, the Fed has stolen crypto’s thunder and all attention has gravitated towards what they will do next, and we can see that in how Bitcoin prices have fluctuated because of that.

I expect a slow grind up from the mid-$40,000 if the Fed signals to investors that they will raise rates slower than first imagined.

Quote of the Day - January 4, 2022

Bitcoin Letter

“Bitcoin is like anything else: it's worth what people are willing to pay for it.” – Said American Investor Stanley Druckenmiller

December 30, 2021

Bitcoin Letter

Mad Hedge Bitcoin Letter
December 30, 2021
Fiat Lux

Featured Trade:

(CRYPTO PASSIVE INCOME THE RIGHT WAY)
(CELSIUS NETWORK), (BTC), (ETH), (SNX), (CEL), (LINK), (UNI), (AAVE)

Crypto Passive Income the Right Way

Bitcoin Letter

So global yields are in the toilet today?

Savings accounts don’t do what they used to do, do they?

How about we try out a certificate of deposit (CD) to harvest some cash?

Are there simply no other interest-bearing vehicles one can park capital in and gain a healthy return?

I would say you are right, but then I would be the fool here and I am certainly not in that line of work.

I will tell you — there is an elixir to the anathema!

Enter Celsius.

Celsius is a crypto-based financial service hoping to disrupt traditional financial services.

They offer cryptocurrency savings accounts that yield high annual interest rates up to 17% annually. They do this by lending cryptocurrency out to institutional and retail traders who seek to leverage their positions.

Since these platforms require collateral to receive a loan, investors can be sure that the loan will be paid back one way or another.

While these rates are floating interest rates, meaning they can change with the market, they’re relatively stable month-over-month.

These loans are over-collateralized, which means the risk of default is lower than it would be for a standard loan. To this day there has never been a default for any coin on this specific cryptocurrency lending platform.

How Do Celsius Make Money?

Celsius primarily generates revenue through its crypto lending service. The company lends assets to users at a higher interest rate than it pays them for storing their assets on the platform.

Celsius has more cryptocurrencies available for interest-bearing accounts, including BTC, ETH, SNX, CEL, LINK, UNI, and AAVE to name a few.

Payouts and Withdrawals

Celsius users can withdraw their funds at any time without incurring additional fees. Those who wish to withdraw over $50,000 with a single transaction need to wait 24 to 48 hours for it to process. The company makes its weekly interest payments on Mondays.

Let the compound interest payments pile up all while exposed to minimal market risk.

Celsius confirms its holdings of $20,366,621,718 in cryptocurrency assets as of August 13, 2021.

In less than one year, Celsius has grown its total asset holdings from $1 billion to over $20 billion.

Do you want to be part of this 20X growth story?

As part of its Proof of Community (POC) and rewards explorer, Celsius provides real-time data about its assets, loans, users, and rewards paid.

This asset growth trajectory is parabolic with Celsius confirming it is adding close to $1B a month in new assets, as the company trends towards the number one position in total asset holdings in the crypto industry.

For years the traditional banking business has conditioned us naïve folk to accept steep fees and no yield earnings on holdings as the status quo.

I will tell you right now that it’s a load of garbage and nobody should accept these pitiful offers from dinosaur banks.

There is so much more out there that we can access now because of crypto.

With that failing model ripe for disruption, Celsius was built to give consumers what banks never could — a community-oriented platform that provides income and financial independence and it delivers it with a bang.

At the start, Celsius had set a goal to bring the next 100 million people into crypto. Today, they have over 950,000 users worldwide.

Celsius has even just launched its crypto-backed lending service in California following regulatory approval.

The California expansion enables the firm to enlarge its footprint in one of the fintech capitals of the world — California.

The firm claims that it now is "one of the most accessible and affordable lenders in California."

The loans can be issued in both United States dollars and stable coins, the minimum loan value is $500, the process is instant, does not need proof of income or credit check.

You are not dreaming — this is the real deal.

Wake up to fresh crypto interest payment receivables on Monday morning easily convertible into fiat currency.

Participate in one of the most unique crypto deals in the world.

To check out this deal of a lifetime, click here to visit their website.

(https://celsius.network/)

Quote of the Day - December 30, 2021

Bitcoin Letter

“Cryptocurrencies may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.” – Said 14th Chair of the US Federal Reserve, from 2006 to 2014 Ben Bernanke

December 28, 2021

Bitcoin Letter

Mad Hedge Bitcoin Letter
December 28, 2021
Fiat Lux

Featured Trade:

(THE ART OF BITCOIN MINING)
(BTC), (ASIC), (GPU)

The Art of Bitcoin Mining

Bitcoin Letter

What Is Bitcoin Mining?

Bitcoin mining is the way in which new coins are added to the existing supply of the cryptocurrency known as Bitcoin (BTC).

These transactions are confirmed by the network and represent a critical component of the maintenance and development of the blockchain ledger.

Cryptocurrency mining is attractive to many investors interested in cryptocurrency and the most profitable are able to do it on a large scale incorporating an industrial mindset.

How Do I Mine Bitcoin?

Mining Bitcoin is not for the faint of heart.

Your computer must solve complicated math problems that verify transactions in the currency.

When a bitcoin is successfully mined — the miner receives a bitcoin.

One can use a normal computer that has a CPU, motherboard, RAM, and storage to mine bitcoin.

The only difference and the most important requirement here is the graphics processing unit (GPU) or the video card.

A high-performance GPU is a must if a person wants to mine Bitcoin.

Bitcoin mining is done using hardware called ASICs that is short for Application-Specific Integrated Circuits.

Another obligatory requirement is electricity for mining machines.

The largest bitcoin miners are usually found in countries with low-cost electricity.

Miners need robust infrastructure to mine mainly energy and equipment.

How do I do it at home?

A company called Compass Mining is betting that individuals will want to partake in bitcoin mining.

There’s a lucrative payout — if you’re lucky enough to mine a coin.

But the hassle of operating a mining rig can certainly cut into profits.

Compass’ new retail program will allow the purchase of a single application-specific integrated circuit (ASIC) mining rig that they can set up at home.

Mining corporations usually buy in bulk — this finally gives the little guy a chance.

Brands include top-of-the-line ASICs WhatsMiner series from MicroBT and the Antminer series from Bitmain, offering 78 to 95 Tera hashes per second and ranging in price from $8,100 to $10,400.

Profitability calculators can help you estimate your potential ROI.

Rigs are noisy and hot so it’s not for everyone.

Potential miners really need to do their due diligence if they want that sort of environment in their house.

About the size of a desktop computer tower, they can emit between 50 and 75 decibels of noise, which is roughly the same level as a vacuum cleaner or a hairdryer.

Just like the work-from-home paradigm was borne out of the pandemic, many who want to mine bitcoin, wish to do it from the confines of their couch and man cave.

The demand for mining hosting sites in North America has been outstripping supply. Encouraging bitcoin enthusiasts to set up their own operations at home is one way to relieve the pressure on existing hosting infrastructures.

China has now initiated a blanket ban on cryptocurrencies opening up opportunities for alternative miners before these Chinese mining operations relocate abroad.

The crackdown nearly halved the mining difficulty for the entire Bitcoin network. Miners outside China have been able to mine more bitcoin given the record low mining difficulty, raking in high revenue.

Corporate self-mining companies, such as Marathon and Riot, as well as third-party hosting sites, are facing a shortage in infrastructure to support more mining operations.

Higher bitcoin prices also mean more incentives for potential miners to flood this industry.

If Compass doesn’t seem right for you, then buying mining machines either from Chinese miners or from mining machine manufacturers through e-commerce platforms such as Alibaba and eBay could be a great option.

Individual mining rigs from Compass are expected to deliver within two to three weeks.

December 23, 2021

Bitcoin Letter

Mad Hedge Bitcoin Letter
December 23, 2021
Fiat Lux

Featured Trade:

(HOW TO SET UP A CRYPTO TRADING ACCOUNT)
(BTC), (COIN)

December 21, 2021

Bitcoin Letter

Mad Hedge Bitcoin Letter
December 21, 2021
Fiat Lux

Featured Trade:

(THE BEST CRYPTO ETF RIGHT NOW)

The Best ETF Right Now

Bitcoin Letter

It’s my responsibility to new readers of the Mad Hedge Bitcoin Letter to offer an imminent snapshot of where we are in the crypto universe at this point in time.

It would be negligent if I didn’t.

To say that Bitcoin is the only investment in the crypto sphere is also not true — sure, Bitcoin is the biggest, most trusted crypto network, and many have become grotesquely wealthy because of it — yet there are other altcoins out there.

Knowing what to digest and what to avoid like the plague is where I come in.

Don’t get me wrong — I am still highly bullish on Bitcoin as an asset, but we do not operate in a vacuum.

As one might have assumed, lesser coins with cheaper pricing benefit/suffer from the law of small numbers with wider gaps in percentage change on up and down days.

It’s just the nature of the beast.

Overall, the second-largest cryptocurrency by valuation performing well is a highly bullish signal for Bitcoin itself.

It’s a victory in itself that it finds itself near all-time highs of around $4,000.

It also signals increasing adoption which is positive for the security and regulation of the broader asset class.

I subscribe to the “rising tide lifts all boats” theory in cryptocurrencies as it does more to legitimize the top asset than pull capital away from it.

The most poignant takeaway is that readers cannot just overlook other cryptocurrencies just because Bitcoin is the apex warrior.

Returning to the foundations, cryptocurrencies have a reputation for being difficult to understand, so don’t be embarrassed if you’re befuddled — I felt the same way the first day I tried to understand this stuff.

The Harris Poll earlier this year found that 61% of people who had heard of cryptocurrencies still had little or no understanding of how they work.

How Do I Buy Bitcoin?

Conventional wisdom has it that the most likely route is a Bitcoin online exchange.

Create an account — enter a payment method.

Reputable exchanges will require information such as bank account details or a debit or credit card.

Then the proof of identity is required such as a driver’s license, ID, or passport.

After verification, purchase Bitcoin by transferring it to a personal hot wallet and buy and sell the asset!

Remember that these accounts coming directly from bitcoin brokers aren’t insured and aren’t secure.

Therefore, a better way to mitigate risk is by going through a Bitcoin ETF on the U.S. public markets with an official broker registered with the Security and Exchange Commission (SEC).

Not only do public stocks provide additional security as a bitcoin trading vehicle, but ETFs are an aggregation of crypto-asset tracking data points reducing the volatility even more.

Unregulated crypto exchanges come with a higher understanding of operational and systemic risk and not everyone wants to venture into the arid Wild West without a horse or water.

If you trade with an official brokerage registered with the SEC, you are covered by Federal Deposit and Insurance Corporation (FDIC) insurance up to $250,000 per account holder in a financial institution.

If there are joint owners, then the account is insured up to $500,000 ($250,000 for each owner).

The FDIC is a U.S. government agency so, in effect, these accounts are federally insured.

There is also another layer to this — you are covered by Securities Investor Protection Corporation (SIPC).

SIPC is a U.S. government creation but not an agency of the U.S. and insures all brokerage accounts up to $500,000, but only up to $250,000 for cash in such accounts that are intended to be used for securities transactions.

Cash in brokerage accounts only for the purpose of earning interest is not protected. While SIPC has been established by Congress, it is funded by all of its member broker/dealers.

In many cases, SIPC protects against unauthorized trading or theft in the account.

My favorite crypto ETF is Amplify Transformational Data Sharing ETF (BLOK) which has morphed into one of the best crypto ETFs on the market since its inception.

BLOK is an actively managed ETF that seeks to provide total return by investing at least 80% of its net assets in equity securities of companies actively involved in the development and utilization of blockchain technologies.

BLOK’s biggest two positions are Bitcoin proxy MicroStrategy (MSTR) and a Canadian crypto mining company called Hut 8 Mining Corp (HUT).

I have already shot out a MicroStrategy trade alert to new readers and am incredibly bullish on the company.

However, this ETF encompasses more than MSTR offering broader exposure to firms related to Bitcoin, crypto miners, and software companies that are heavily into crypto.

Hut 8 engages in industrial-scale bitcoin mining operations. It also owns and operates 38 BlockBoxes in Drumheller, Alberta, and 56 BlockBoxes in Medicine Hat, Alberta.

BlockBoxes are one of the most powerful and cost-effective bitcoin mining units available on the market.

BLOK doesn’t track bitcoin 1:1, but it does mimic the price action relatively closely albeit with less extreme swings.

Controlling excess volatility is something you should be happy about.

BLOK also has an expense ratio of 0.71% which isn’t too expensive for those who want to buy and hold the ETF and not trade the derivative.

Buying BLOK is most likely the best way to ensure safe trading under the framework of the SEC, but I understand others have a higher risk profile which is also welcome.

To understand more about the ETF BLOK, click here.

(https://amplifyetfs.com/blok.html)

The crypto revolution is in its early stages and the possibilities are endless considering the adoption is just beginning.

However, we cannot just assume bitcoin will always lead the charge, and taking note of what is happening in the rest of the industry offers us even deeper insight into how the bellwether (bitcoin) is performing and reacting to the future challenges as top dog.

The truth is that there will be several winners from higher crypto prices and not just bitcoin. As a technology, blockchain will also be a massive winner from higher crypto prices.

Even if one does not want to profit from crypto, this will be the intellectual challenge of a lifetime.

BLOK ETF INDUSTRY ALLOCATION