Keep an Eye on 'Bitcoin' as The Next 'Financial Crisis' Starts

By: Chris Vermeulen | Mon, Jul 18, 2016
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'Bitcoin' is on a tear away rally. Its' performance, over the last year, has been outstanding and it has outperformed most 'asset classes', by a wide margin. It is probably the only asset class which beats out both gold and silver, in 2016. Why is it shooting into outer space?

1-Year BitCoin Chart

People look at alternate asset classes when their confidence in traditional assets fades. Since the beginning of the year, both the stock and the commodity markets have been on a roller coaster ride while catching both the bulls and the bears, on the wrong side.

The macroeconomic situation of the world does not give confidence to the astute investors which is evident by the return of the legendary George Soros, who has come out of retirement to short the overblown markets. Similarly, other hedge fund managers are stocking up on gold, which supports our view that a 'financial crisis' is right around the corner.

The "Brexit" results have also opened up a possibility of another round of easing by the central banks, around the world. The Bank of England will most likely resort to an easing schedule during the next meeting which will be followed by the European Central Bank and the FED. Post victory in the elections, the Japanese Prime Minister Shinzo Abe is likely to push the Bank of Japan to announce another round of 'easing'.

Since the last 'financial crisis', the combined central banks have pumped massive amounts of money into the system and they continue to do so, at a rapid pace, nonetheless, the world is closer to a 'financial crisis' than ever before.

Balance Sheets of Major Central Banks

The FED's money printing policy had led the commodity Guru Jim Rogers to remark: "The FED will continue to print money until there are no trees left in America."


'Bitcoin' is doing the opposite of central banks:

Compare this with the cryptocurrency 'bitcoin'. Unlike the traditional currencies, the 'Bitcoin' has an upper limit of 21 million coins, post which no more Bitcoins can be mined.

Every subsequent mining will become difficult and will reduce the reward associated with mining each block. Satoshi Nakamoto programmed that post-mining of 210,000 blocks, the rewards will be halved.

Initially, the reward was 50 'Bitcoins' for every block, which was halved by the end of 2012, at which time the reward was reduced to 25 'Bitcoins' per block.

The next round of halving took place, last week, when the rewards were reduced to 12.5 'Bitcoins' per block.

While the central banks have been on a printing spree, the 'Bitcoin' is on a tightening route which boosts its' price, as is visible in its' sharp rise, this year.

A few miners will find it difficult to continue mining at the halved rewards which is likely to slow down new mining as halving will continue, in the future.

"The block halving will dramatically decrease the bitcoin being added as we approach 75 percent of all bitcoin issued. People understand that in this world of ever expanding assets and printing of money, we have something that's fixed and limited in issuance. It gives a decent alternative for people who want to hold assets that can have sustained purchasing power," stated Bobby Lee, Chief Executive of BTCC which is one of the largest' bitcoin' exchanges, in the world, based in China reports CNBC.

I recently watch a fantastic TEDX talk on Bitcoin and digital currencies and how they are changing the world, financial systems, and lives in huge way, and this is only the tip of the iceberg. This TEDX Talk makes so much logical sense why bitcoin and other currencies are so important for us as individual's - Watch Video

However, the 'Bitcoins' volatility has dropped dramatically over the past few years with the lowest linear level of volatility seen since is this asset class started. It has become easier to use for trading, purchasing and using for purchases. I am presently only highlighting that readers will do well to keep an eye on 'Bitcoins' and other crypto/digital currencies, along with gold and silver.

In fact, I have been researching the digital wallet solution where I can purchase many up and coming digital currencies within one location as a NEW ASSET class for my portfolio. Why? Because I firmly believe the masses will slowly migrate their money into various digital currencies a safe haven store of wealth and for ease of use. Payments can be made with your mobile phone to anyone, anywhere in the world and for any amount with ZERO fees/costs, and in many cases it cannot be traced.

Sir John Templeton, the legendary mutual fund manager and founder of Templeton Group, said:

"Invest in many different places - there is safety in numbers."

So in short, I will share with you in future articles and as a subscriber to my trading and investing newsletter exactly which digital wallet, and digital currencies I will be buying and interested in learning more about as the world and financial systems evolve. When the time is right to invest my followers will know.

 


 

Chris Vermeulen

Author: Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
Collingwood, ON, L9Y 3Z1

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Chris' mission is to help his clients boost their investment performance while reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and investment newsletter service. Chris is responsible for market research and trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors around the world. He designed an automated algorithmic trading system for the S&P 500 index which solves his client's biggest problem related to investing in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades' automated trading systems allows individuals to investing using either exchange traded funds or the ES mini futures contracts. It is supported by many leading brokerage firms including:

- Interactive Brokers
- Trade MONSTER
- MB Trading
- OEC OpenECry
- The Fox Group
- Dorman Trading
- Vision Financial

He is the author of the popular book "Technical Trading Mastery - 7 Steps To Win With Logic." He has also been featured on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and dozens of other financial websites. His list of personal and professional relationships approaches 25,000, people with whom he connects and shares is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight pilots license. He resides in the Toronto area with his wife Kristen and two children.

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