Are you in or out?
That’s a question you might hear at a poker game. Or in your career. Certainly in investing.
In most cases and for most people, you must pick one or the other.
But if you’re a billionaire and head of one of the most best-known and most-traded stocks in the market, you can answer…
In. And out. Or … in, but with conditions.
That’s what just happened with one of the most popular investments and one of the most influential entrepreneurs on the planet…
Four months ago, Elon Musk was “in.” The founder of Tesla (NASDAQ:TSLA) was tweeting about cryptocurrencies. His company bought $1.5 billion worth of bitcoin AND said it would begin accepting Bitcoin (CCC:BTC-USD) as payment.
That sounds all in to me.
But one month ago, he was out. At least most of the way.
Tesla stopped accepting Bitcoin as payment and sold $200 million worth of its holdings to “prove liquidity.” (Huh?) Musk tweeted:
“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
I wrote about the impact on the environment a couple of weeks ago. You might be surprised at Bitcoin’s real impact. I think Elon Musk might be, too.
But this past weekend, Musk took the “we’re sort of in” position. He said Tesla would once again accept bitcoin as payment … once energy usage improves, of course.
Still, it was enough to help fuel a rally in Bitcoin back above $40,000 for the first time in nearly a month.
I think Elon Musk and Tesla will eventually be back to “all in” on Bitcoin and cryptocurrencies, because that’s where the big money and big corporations are going.
Also helping the latest rally were positive comments from billionaire hedge fund manager Paul Tudor Jones. He said what we have talked about many times — that Bitcoin is a great way to diversify your portfolio and a great hedge against inflation.
“I like Bitcoin as a portfolio diversifier,” he told CNBC. “Everybody asks me what should I do with my Bitcoin? The only thing I know for certain, I want 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities. At this point in time, I don’t know what I want to do with the other 80% until I see what the Fed is going to do.”
He didn’t get much help today. The Fed kept interest rates where they are, but it did increase its expectations for inflation from 2.4% to 3.4%. The statement said the increase is due to transitory factors from supply chain bottlenecks, largely a side effect of the Covid-19 shutdowns.
In the spring of 2020, Jones had 2% of his portfolio in Bitcoin, so he’s more than doubled his exposure with rising inflation. I also loved his comment about what Bitcoin really is:
“I look at bitcoin as a story of wealth. I look at crypto as a story of wealth.”
That’s precisely the attitude shift that we see happening everywhere … with businesses, governments, consumers and investors.
Blockchain — the technology cryptocurrencies run on — will rewrite how business is done and how personal fortunes are built in the modern age. It is the safest way to store and transfer information ever created. It’s going to make everything more transparent, more secure and more cost effective.
Keep in mind perhaps the two most important facts that illustrate the opportunity:
Everything will soon run on the blockchain as it becomes the new internet.
And the only way to have direct ownership in this groundbreaking technology is through altcoins, which are any crypto other than bitcoin.
This revolution is already underway, and we continue to expect a huge rush into cryptocurrencies in the coming years as businesses, consumers, and big-money investors realize what’s going on.
And believe me, they are.
MicroStrategy (NASDAQ:MSTR) issued $500 million more in debt … only to turn around and buy more. It already has the largest amount of bitcoin on its balance sheet of any publicly traded company.
And maybe most important of all … El Salvador President Nayib Bukele announced that he was going to make Bitcoin a form of legal tender in his country. In other words, a legal currency. Politicians in seven other Latin American countries indicate that they are interested in doing the same.
El Salvador is a small nation. And yet, it becomes the first nation on Earth to adopt Bitcoin as legal tender. Its bold move lays the groundwork for even wider adoption and utilization.
Disruption is what blockchain and cryptocurrencies are all about. Bitcoin — and altcoins even more — provide solutions to and a better way forward from the traditional financial system.
In fact, in another major step forward, crypto investments are now coming to 401(k) accounts. Coinbase (NASDAQ:COIN) — one of the biggest, easiest, and best-known crypto exchanges — is teaming up with ForUsAll, a leading 401(k) investment platform, to offer crypto investments in those retirement accounts.
This is a big deal. It is yet another onramp for investors that will draw more money into cryptos.
You can see why I say blockchain will change almost everything — how you search for things online, buy goods and services, borrow money, heat your home, buy a house, vote, pay your taxes and more.
It’s also why I say that buying altcoins right now is like backing great software makers — Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Uber (NYSE:UBER) or Oracle (NYSE:ORCL) — in the early days.
I believe that investing in the best altcoins right now is like investing in Bill Gates’ Microsoft in 1986 … just before the world went wild for its productivity-enhancing software and shares skyrocketed.
On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.