Today I’m giving you cryptocurrency insight from someone with a striking record of accurate predictions…
David Zeiler, a friend and colleague of mine here at Money Map Press, is recognized as one of the financial world’s foremost experts on cryptocurrencies – which is why his work is widely followed at Money Morning, on Twitter, and even through his “Crypto Recap” video series.
Trust me when I tell you: I know firsthand that he’s amassed his crypto expertise in the best way possible.
How so, you may ask? Through immersion.
You see, Dave was an early Bitcoin “miner” – back when it was still possible for an individual investor to be a go-it-alone cryptocurrency prospector.
In early 2016, when Bitcoin was trading at $450, Dave predicted – on the record – that the crypto coin could zoom to $2,000, and then go higher from there. Much higher, he said.
And it did – zooming past $19,000 in December 2017 before the crypto market nosedived.
After that collapse, Dave predicted the crypto market would experience an extended malaise, noting that there just weren’t any new “triggers” on the near-term horizon. And the U.S. Securities and Exchange Commission was holding back on approving Bitcoin ETFs – a “trigger” he said would have a big, big impact when it came to pass.
In early April of last year, Dave told me that the “Crypto Winter” was over. And he said that Bitcoin and the other quality cryptos – Ethereum (ETH) and XRP, the No. 2 and No. 3 crypto-coins by market cap – would rally.
Again, Dave was correct.
From a price level of about $5,050, Bitcoin more than doubled – zooming up above $12,000.
Since then, Bitcoin has again sold off, recently dipping below $7,000. But the crypto bellwether just enjoyed its first four-day winning streak since July. As I write this, Bitcoin is trading at over $8,000 again. (We should note that BTC ended 2019 with a 94% gain.)
And while Bitcoin’s record as a “safe haven” asset is spotty at best, Dave just told his followers on Twitter that the No. 1 cryptocurrency seems to have joined gold as a safe-haven asset during the recent Iran crisis.
Given all that’s happened, I figured this would be a good time to catch up with Dave again. He gave me the insider’s scoop on how high Bitcoin will go in 2020…
Ask the Expert: Where Bitcoin Has Been and Where It’s Going
William Patalon III: OK, since price is the best metric to use to provide some context for where Bitcoin has been – and where it’s going – let’s start there. Looking back over the past few years, it’s been a pretty wild ride. So when given the heights of the “super peak” – as well as the “twin peaks” of last summer – where are we right now? And what does that tell us?
David Zeiler: Most crypto folks believe we are in an “accumulation” phase leading up to the next major rally. A lot of those with deep pockets – the “whales,” or the folks I know you like to refer to as “the smart money crowd” – are taking advantage of the volatility to build positions.
Patalon: Let me ask a quick follow-up here… just why is this so doggone volatile?
Zeiler: That’s a great question, Bill. Now… one reason that Bitcoin is volatile is that you’re talking about a still relatively new asset – I mean, it’s only a decade old. And while more people are trading it now, the market is still small enough that a big move by just one or more whales can have a significant impact on the price. Bitcoin can move up or down by 5% or more in a matter of minutes… and in the world of crypto, that’s considered normal.
Patalon: That’s good stuff, Dave. OK, so let’s turn things forward and look ahead since I know that’s what most investors want to know. What do you see for 2020? Before we talk prices, what are the storylines you’ll be following this year – and why? What will it take for those storylines to play out as you expect?
Zeiler: In terms of storylines, there are a couple.
Patalon: I know one of those storylines is the “halving.” Explain that and tell folks why this is such a big deal. And I know it truly is a big deal: I mean, there are even “countdown” sites devoted to it.
Zeiler: Well, the Bitcoin halving will be the biggest event of 2020. That’s when the reward the miners get for each block they mine gets cut in half from the current 12.5 bitcoins to just 6.25 bitcoins.
Patalon: And this matters because?
Zeiler: This matters because the supply of new coins into the market will be cut in half. Now, there’s been some debate over whether the halving is already “priced in.”
To some extent, that may be true. But I see the impact of the drop in supply playing out over months. As the same amount of money chases fewer bitcoins, it will put pressure on prices to rise.
Which brings us to the other side of that equation: demand. I think demand will increase in 2020 as well – led by institutional investors.
Patalon: Right… we talked about this as we prepped for our sit-down. I thought this was fascinating.
Zeiler: I think so, too. In 2019, we already saw more buying from institutional investors. The CEO of Coinbase said just this week that hundreds of small, institutional investors had signed up for his company’s custodial services. And he expects that trend to accelerate this year, with larger institutions coming on board. Larger institutions have more assets. This is something I’ve been expecting for the past two years, and it looks like 2020 will be the year we see it really take off.
Patalon: What else?
Zeiler: Other than that, I think we’ll see additional demand from the public, as new technologies that make Bitcoin easier to use – such as the “Lightning Network” – become more mature.
Patalon: What about the “safe haven” stuff – which I saw you write about on your Twitter account? I found that fascinating.
Zeiler: The fact is we’re likely to see more international turmoil – lots more … like the North Korean nukes saga, the South China Sea disputes and China trade war, an increasingly aggressive Russia, and even the new issues with Iran – all of which I know you’ve written a lot about for your subscribers, Bill.
The upshot: All that turmoil could and probably will drive more people to buy Bitcoin as a safe haven.
Patalon: OK, let me put you on the spot. What are we talking about in terms of price? What do you see?
Zeiler: We’ve had a nice 15% pop in the past week, pushing Bitcoin past $8,000 again. That’s a nice start to the new year. I expect a major rally at some point; the only question is the timing.
In the two prior halvings, a major rally had followed about a year or so following the event. So I don’t see any major moves in the first half of 2020, although we could get back to $10,000.
A much bigger move could occur near the end of the year: That move could get us back to the previous all-time high of $20,000 – and possibly higher.
I actually expect the biggest move in 2021, when I see Bitcoin rocketing to $100,000 before falling back again.
Patalon: That’s a heady call, Dave. What are the risks – the “wild cards” – that could keep this from happening?
Zeiler: If a serious flaw is discovered in the Bitcoin software, that would destroy confidence in crypto and cause a major collapse, although I view that as extremely unlikely.
Major regulatory reversals in Europe and the United States that would make it more difficult to buy and own crypto would weigh down the price for sure. Although again, that doesn’t seem likely.
Another thing getting a lot of media attention lately is the expected creation of digital currencies by central banks. Those digital currencies will be alternative versions of fiat currencies. But I don’t see this as much of a threat to Bitcoin or other major cryptocurrencies. Central bank digital currencies will lack the one key feature that makes Bitcoin so appealing – decentralization.
Patalon: I remember an interesting point you made to me once… saying that “all cryptocurrencies aren’t created equal.” I learned that myself in some reports I did on Kodak’s attempt to create and market a “coin” of its own.
Zeiler: Well, Bitcoin remains the No. 1 crypto – by far. Even with literally thousands of crypto competitors, Bitcoin still makes up about two-thirds of all the value invested in cryptocurrencies. Some newer cryptos are technologically better in some ways – for example, they’re often easier to scale and have much shorter transaction confirmation times. But Bitcoin has scarcity and a powerful “network effect” in its favor.
Patalon: So for the folks reading this, what are the cryptocurrencies that are, let’s say, “investment grade” or “speculation grade?”
Zeiler: Other than Bitcoin, of course, I think the most promising coins are among the top 25 in market cap. I also look for those that have a well-defined “use case,” as well as a strong developer team. Some examples would be Ethereum, XRP, Cardano, IOTA and Neo.
There are a lot of coins worth a fraction of a penny – and that could make you very wealthy if they were to ever take off – but I advise against making such risky bets unless you really know crypto and understand what you’re doing, or know someone who is.
Patalon: That actually brings me to a “context question” here… and I pose it because it’s something that comes up – without fail – in each and every talk we have. There’s a group of “gloom and doom” prognosticators who continue to predict that cryptocurrencies will implode.
Fully… and completely. These naysayers insist this is a totally worthless market – a scam, a bubble, an illusion. These folks – the “crypto curmudgeons,” as I call them – insist Bitcoin and its cryptocurrency brethren have no value. Are they wrong? If not, what is it that these guys are just not seeing?
Zeiler: Yes, I know the folks you’re talking about. But, Bill … these people really don’t get it. What they don’t seem to grasp is that crypto is a new and distinct asset class.
These “crypto curmudgeons,” as you call them, want to plug crypto into one of the existing asset slots, and it doesn’t fit. It shares characteristics of both currencies and commodities. But crypto doesn’t fit in either category – it’s a whole new animal.
They think that – because it doesn’t have a physical existence in the real world – it can’t have value. But crypto has features, such as decentralization and security, that give it value. Unlike U.S. dollars, there’s no central bank endlessly printing more Bitcoin, nobody causing it to lose value to inflation. The supply is fixed at 21 million, and a portion of that has already been lost. And now people are just starting to use Bitcoin as a store of value, like gold, adding to its appeal.
Another issue people have with Bitcoin is the huge price run-ups and hard crashes. They call Bitcoin a “bubble” that has burst. But Bitcoin has gone through several such “bubbles” over the past 10 years, and the price always recovers to move many multiples higher. No bubble in history has ever done that.
Patalon: I guess, then, the question is: What’s the future for cryptocurrencies? Are they a speculation vehicle? A wealth builder? An off-the-grid financing vehicle? The commerce part of it seems to have lagged in terms of what the “vision” was for them.
Zeiler: Some crypto will be used for speculation and wealth building, particularly Bitcoin. Others will serve as tools in the financial world. One likely crypto task includes near-instant settlement of equity trades. Then there’s IOTA. It’s a crypto designed to provide a standardized digital ledger for the Internet of Things (IOT), enabling all those connected devices to easily share data. A lot of these practical applications are still under construction. But they’re coming.
Patalon: What about the “blockchain?”
Zeiler: The blockchain has some great applications. Big traditional tech companies like IBM and Microsoft have already made a lot of progress in this area. IBM is using blockchain tech to increase the efficiency and transparency of supply chains. Microsoft is selling “blockchain-as-a-service” as part of its Azure cloud offerings. I’m sure we’ll see a lot more progress on such projects in 2020.
Patalon: For folks not already involved – but who may be interested – what’s the best way to get started?
Zeiler: Well, Bill … over at Money Morning, we have created a kind of “driver’s manual” for newcomers – a step-by-step guide to follow. It’s free and they can get it here.
Patalon: How ’bout sharing some crypto-related investments for his year? What do you like the best?
Zeiler: Well, Bill… some of the biggest gains I’ve ever seen are happening daily in a little-known class of cryptos that are tied to specific industries like advertising, energy, even agriculture. These tiny currencies help businesses make large financial transactions faster and cheaper. And many of them have been skyrocketing up over 60,000% in a matter of days – a jump the stock market hasn’t even come close to in its 200-plus years of existence. You can learn how to play these industry currencies here.
Patalon: What are others you like?
Zeiler: Some energy companies with exposure to crypto mining is another way to play this trend. A couple of possibilities are Next Era Energy Inc. (NASDAQ: NEE) and Pattern Energy Group Inc. (NASDAQ: PEGI).
Patalon: As always, good stuff, Dave. Any final comments?
Zeiler: If you are looking to trade in and out of cryptos – versus buying and holding them – then I highly recommend you look at what our resident trading genius Tom Gentile has created. It’s an incredibly accurate trading system that examines hundreds of cryptos in real time. And then determines the best entry point… just before they skyrocket. Using this pattern system, the gains have been spectacular. Using Tom’s pattern, you could have seen gains like 939% on CCX. It’s pretty spectacular. You can see his method by clicking here.
I truly believe this is the best way for traders to get into crypto right now. So I’m glad to offer these insights.
Patalon: We’ll watch for any big developments – and if they happen, we’ll bring Dave back.
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