The research we released Tuesday was a huge hit.
It makes sense.
At nearly the same time as we went to print with our work, the fine folks at Bank of America (BAC) released a report of their own.
They tell us that “long Bitcoin” is now the most crowded trade in the market.
It’s now seeing more cash inflows than any other asset class.
“Long tech” – the trade that seemed to mint so many millionaires in the last 18 months – has found some stiff competition.
The gain potential is much, much bigger.
But we warn investors not to focus just on Bitcoin.
There are other players out there… like the three in our new research.
While Bitcoin has soared 230% in the past 90 days, other smaller coins have risen far higher – up 2,900%…. 1,900%… and 1,800% in just three months.
It’s no wonder so many folks are writing us, filling up our mailbox with questions on how to get in on the action.
Here are some of the most common questions… and our answers to them.
How Do I…
I have an account in Coinbase, but it does not handle all crypto! Do I need to open another account somewhere else? – Reader K.C.
This is, by far, our most common question.
Not all exchanges offer access to all coins – at least, not yet.
Remember, we’re investing in an asset class in its infancy. Exchanges will soon start to consolidate, and, as they do, offerings will expand quickly.
Right now, you’ve got two options.
The first is the simplest. Pick a single exchange and stick to the coins on it.
It limits your offerings but keeps things easy.
The second is a bit more complex but offers far more opportunities. It involves setting up two or three accounts.
It sounds complicated, but it’s really not. After all, the exchange is just for buying and selling.
It’s like going to one store for tires… and another for milk.
It will be years before the crypto equivalent of Walmart emerges and offers both.
No matter where you get the coins, you’ll store them in the same wallet. Just like with a bank, your funds will stay together.
We recommend Coinbase, Gemini and Binance.us.
What percentage of a well-balanced portfolio should be allocated to cryptocurrency? Thank you for your help! – Reader C.W.
Back in our money management days, we used to hand the same pie chart to every client. It was printed on fancy paper, with the company’s logo emblazoned across the top.
The thick paper made it good for scraping crumbs off a table. That’s about it.
No one allocation fits all investors.
To be clear, crypto is a 100% speculative investment. Then again, as more and more money is printed, the same is increasingly true for just about any asset.
Don’t mortgage the farm to play crypto.
We’re aiming for supersized returns in the sector, which means just a bit of cash will do just fine.
In Manward’s unique Modern Asset Portfolio, we recommend a 10% allocation to a diverse array of cryptos.
That’s a lot… especially for traditionalists.
But here’s the thing… We’re not traditionalists. Far from it. This is not a buy-and-hold (or is it buy-and-pray these days?) portfolio. The whole idea behind it is that we change our allocations as interest rates change.
We know of no other strategy like it.
Right now, we’re loading up on crypto… and it’s paying off.
But if interest rates rise, the free-money machine will likely slow. That means the factors that are sending crypto soaring today will wane. If it happens, we’ll tweak our allocation and move into the next hot asset class.
Again, we’re not traditionalists who stick to the same strategy decade after decade.
Bottom line is this… With more freshly printed money in the economy, each of us should own more crypto this year than last year – a lot more.
What’s It Worth?
Hard to understand how something that is purely digital can have any value, to be used to purchase anything. – Reader J.B.
Tell that to the dollar.
But you’re right, J.B. Many – if not most – of the cryptos that are out there today will never be used as currency… at least not in the typical sense of the idea.
We’ll never go to the store and use one of these tiny cryptos to buy a gallon of milk.
That’s why it’s important to think of them more as tokens than coins.
Sure, Bitcoin and a few others are nipping at the heels of sovereign money, but many of the smallest cryptos have no intent of ever taking over the dollar.
Instead, they represent access to various platforms.
For instance, we’ve been studying a platform that could revolutionize the Internet of Things. Its tokens create an incentive for electronic devices to talk to each other.
Another interesting coin that we expect to see take off could revolutionize the financial industry. It allows investors to compete in a transparent market, attracting potential investors… who invest via tokens.
It’s quite interesting.
Details of similar coins are in our latest research.
Andy – if you don’t have time or aren’t comfortable owning one or many alt cryptos, is there a fund or ETF or other way to own in the space that would give you coverage on most of the legit cryptos? – Reader C.S.
There’s no good way to buy altcoins through an ETF. We would not recommend it if there were.
Again, we’re looking at short-term speculation, not long-term buy and hold. This is a volatile and speculative market with sharp swings in both directions.
That means we must buy individual coins and have a proven technical system behind it. As you know, we use volume. An ETF could not do what we do.
If you’re looking to simply buy and hold Bitcoin or Ethereum, the popular Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) are fine choices.
Andy, you say to buy stocks, land and crypto. But not gold and silver. Why not? – Reader W.P.
Ahh… we’d never tell readers to not buy gold and silver. In fact, our Modern Asset Portfolio calls for a healthy 10% allocation.
But the reader caught onto our recent musings about all the freshly printed money floating around and what it’s done to speculative assets. Gold, as you know, has largely been flat.
That’s because it’s more of an insurance policy than a speculation.
Gold stays quite calm… until things fall apart.
Its time is coming.
Right now, though, we’re riding this bull for all it’s got.
And, boy, does it have a lot to offer.
For all of our thoughts on why this is the “Year of Crypto,” click this link. When you do, you’ll see why so many cryptos have flat-out trounced even the best stocks.
But the fun is just getting started.
Keep the questions coming. Send an email to firstname.lastname@example.org.
P.S. If you are unclear on how to buy and sell crypto, don’t worry. In this presentation, I detail how you can get your hands on all the information and tutorials you need to get started. With it, you can be trading crypto in 20 minutes or less. Click here.