Bitcoin Under $10,000???

by Andrew Zatlin

The end of cryptocurrency?

It may sound like hyperbole.

But according to the data, it’s a real possibility…

And it could happen as early as next year.

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

Bitcoin Under $10,000???

Christmas may be over. But I’m still dolling out gifts…

In the form of bold predictions for 2023.

Last week, I told you that Israel was going to bomb Iran.

Now I’m forecasting another major event — one that can be summed up in four words:

The collapse of crypto.

What is Crypto, Anyway?

The reason for my conviction is simple: it’s all in the numbers.

I’ll show you what I mean in just a moment. But first, let’s review what crypto is and, just as important, what it isn’t.

First off, crypto is not a traditional asset:

Things like stocks, bonds, commodities — these investments generally offer cash flow. Furthermore, they have tangible value. There’s something there.

Second, crypto is not a legitimate medium of exchange, like cash or credit cards:

There was talk of crypto replacing the U.S. dollar. But that’s not going to happen. Even forward-thinking companies like Tesla have stopped accepting crypto as a form of payment.

So, is crypto a form of digital gold? No way:

If so, it would be a hedge against inflation. Sorry, crypto. You’ve been a crappy inflation hedge.

It would also have to be considered a safe haven during times of turbulence. And I’ve got three letters for you in response to that: F.T.X. (More on this in a moment.)

Pure Speculation

Folks, crypto is nothing more than pure speculation.

It’s just an idea.

And this idea gained significant traction thanks to a combination of grifters and “hot money.”

Let me explain…

The Reason for Crypto’s Strength

You see, crypto’s strength was largely due to the money flowing into the sector…

And this is where we start to get into the numbers that I mentioned were so important.

For a long time now, crypto’s been driven by hot money — extra cash people had in their pockets thanks to a booming stock market, booming home values, and stimulus checks.

They took this extra money and flooded the crypto market, sending the prices of many coins soaring. In fact, let me show you the shocking correlation between the price of Bitcoin and the amount of hot money…

Just Look at These Charts

Here’s a ten-year snapshot of the price of Bitcoin:

You’ll notice it popped in 2018, then faded. But as we entered Covid, a massive surge happened. The price of Bitcoin went from $10,000 to $70,000 virtually overnight.

Since then, however, the price has cascaded down. And as I mentioned, this drop is easily explained… by this chart:

This chart shows the number that’s key. It’s called M3. Essentially, it represents the money supply that’s out there — basically, everything except frequent-flyer miles.

Notice how the supply starts to fade in 2019, just like crypto, but then zooms up during Covid as the Fed released more money into circulation.

But now, just like crypto prices, this number is falling.

Bottom line: the drop in hot money contributed toward the fall of crypto prices. And a rash of headline-worthy scandals haven’t helped…

The FTX Scandal

In summer 2021, FTX was the third-largest cryptocurrency exchange in the world. Today, it’s bankrupt, and its executives are in hot water.

FTX would take people’s investment dollars, transform them into its own digital currency, then take that money back out. Every time the currency’s value fell, a mystery buyer (FTX) would use that money to buy more digital currency. In other words, they pumped up its value.

Of course, the situation has hit the fan. And now regulators are looking at FTX and insisting on action.

Because keep in mind: regulation is sunlight for crypto. The Bank of England has already said crypto’s too dangerous to be unregulated. This will be a hot topic moving forward.

The End of Crypto?

For now, though, crypto is pure speculation. And so are projections regarding its future.

Will it disappear completely? Will the price of Bitcoin fall to zero?

It could happen. But I’m fairly certain it’ll fall below $10,000. Because that’s where it was before all this hot money entered the market.

When you step back and see the big picture, you’ll notice a lack of hot money. People are worried about a recession and there’s less confidence in crypto.

Best-case scenario: we see Bitcoin fall back to $10,000. But I think it’ll fall even further.

But no matter where it lands, there will be opportunities to make money. You just need to know where to look, and how to trade.

As 2023 comes into focus, that’s what I’ll be here to tell you.

In the meantime, we’re in it to win it. Zatlin out.

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In it to win it,
Andrew Zatlin
Andrew Zatlin
Moneyball Economics