Bitcoin Investing as a Recession Hedge

By Melissa Finnegan0 Comments
Recent stock market volatility has some investors looking for alternatives. Bitcoin could be an answer.  In his latest video, cryptocurrency investing expert Roger Bryan discusses why Bitcoin would be a hedge if a recession is on the horizon.
 
Also, in this month’s video there is a discussion about recent IRS letters sent to cryptocurrency investors making sure they file taxes on any investment gains. Roger talks what that means for investors now and in the future.

Bitcoin and the Stock Market: What’s Important to Know?




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Transcript:
There's a lot going on from a macro- market perspective and then down into the micro cryptocurrency and blockchain markets right now and it really comes down to what your thoughts are on the overall economy that might lead you towards the best path forward.

If you believe that the stock market is healthy, that the Fed knows exactly what they're doing, and that the trade war with China is going to work itself out prior to the next election cycle, then you're probably going to see more value in staying in the public equity markets.

Now, if you have a contrarian view to that and you believe that there's a potential for increased tensions from trade wars which seem to fluctuate day by day on positive and negative influence on the overall markets, if you believe that the Fed has historically made bad decisions at the wrong time that could lead to a downturn in the overall economic cycle, or if you believe that the overall stock market going on its longest bull run in history is poised to show a little bit of weakness and/or that we have some recessionary elements pushing down on the overall markets even more so than what I just talked about, such as student loan debt, mortgage debt, credit card debt, or a lot of the other negative influences on the market, then, you may be looking for a flight to safety and your decision may be to look at that from a gold perspective or potentially a Bitcoin perspective.

Now the overall markets right now are slowly inching up.

A lot of professionals are saying that this is because of those pressures coming from the position of the macro-economic markets, but there's also some things going on underneath all of this that the general public might not be completely aware of, and they might not be aware of it because it doesn't have significant value, or they might not be aware of it because they're ignorant and they're used to the traditional markets being the way that they are.

Right now what we see and the overall blockchain markets is the development and the maturity of secondary markets, and when I say secondary markets, I'm talking about the liquidity in privately held company's stock. We're starting to see some of these platforms come online for securitized tokens.

We're starting to see some of the platforms that have been used to raise capital for these private companies mature, get their broker dealer's license, but we're also starting to see that some of the larger secondary market players are joining forces with some of the fundraising, some of the secondary market, and then the new alternative trading platforms or ATS that have come online with permission or approval by the SEC, FINRA and the other organizations that the US Government puts out there in front of us.

Now, how does this create opportunity for you? Well, the great thing is the team at Equity Trust is continuing to expand the coverage of coins that are available in their digital IRA portfolio. They've just added Stella, NZ Cash. Now, if you click the link below to download our monthly newsletter, you're going to see that we did a breakdown in each of those projects to let you know what they'd been working on for the past few years and give you some information on their current value market cap and things like that. So I highly recommend you taking a look to dive deep into that.

I want to kind of stay on this macro-market element for a minute or the layer right below that when I was talking about the maturity of these middle markets. Overstock which owns the Medici Group, which owns tZERO, as of yesterday, August 12th opened up their platform to the public markets to be able to trade in their security token.

Now that did lead to a huge increase in volume on that market on that day, but we also saw an article come out today on Seeking Alpha that really shows a short push on overstock based on some deep dives into their latest earnings statements and cast a shadow on some of the forward thinking things that Patrick Byrne is starting to try to do with those organizations. It's definitely worth a read if you go and take a look for that.

Now what are these secondary markets? They are the ability to sell equity in companies to the public and allow the public to then trade those equities even if in a somewhat illiquid manner.

The maturity looks like when you look at companies like StartEngine that is a regulated crowdfunding platform that allows for people to raise money under Reg CF, Reg A, Reg S, different types of Reg D and Reg C, giving the private companies access to public markets with some of those, some of those are still are credited investors only, but now within getting their broker dealer's license, you can start to see their path to liquidity for the previous offerings that they've done.

One of the first offerings from 2017 that was listed on StartEngine, I'm not going to name it because it's not a recommendation. You can go to the StartEngine website or look at some of their news to get more information on the different investments that are available there. Just filed for it's Rag S1 so that it can start its path towards an IPO. Which is interesting because just a few years ago you weren't seeing any of that in these smaller middle market companies.

Over the last few decades you've see nothing but the public market shrink to be about one-half of what they were just in the '80s because of regulation and further tightening on the regulation around publicly traded companies.

The question becomes can these platforms, most of them are blockchain based, not necessarily all of them, but there seems to be over the last ten years, the creation of this middle market, the ability to raise capital in a new manner regulated and the ability to take those shares to public market for liquidity and trading in a new manner that a lot of it's riding on blockchain.

Whether it's timing or it's congruence, it's happening and you've got to be aware of that and you've got to be going out and taking a look at the opportunities that that affords you.

We tie all of this back together to the assets that are available on the Equity Trust platform. You do see forward price movement in Bitcoin. We saw some huge spikes over the last 8 to 12 weeks in Ethereum and Litecoin only to have them fall back down to kind of stabilize as secondary assets again to Bitcoin.

Bitcoin is pushing all-time market, let's not call it all-time, pre-2017 would be totally different, but it's pushing back to its largest point of the $300 billion market share that's available in crypto currency, pushing back up towards 70%, really showing that those investors that are in the market see it as the most valuable asset in the market.

So if you tie all of this together back into what we started this call about, you'll see that if you do believe that there are some negative effects or downward pressure on these macro-economic environments and you're looking for a flight to safety, your choices really are gold and Bitcoin. Now, if you want to look at over the last ten years at which one's done better, there's a clear winner. If you want to look over the past few decades at what gold has done or hasn't done, when you compare it to inflation and then compare that to Bitcoin, you have a clear winner again.

Now I'm not going to say what the clear winner is, I'm going to leave that up to you. My opinions on the value of these assets from a forward-looking perspective are those of me and not of Equity Trust. If you would like to dive in deeper to some of the other news articles, I would highly recommend you click the link below. Download the newsletter.

We talk about MasterCard getting into the blockchain game. Ooh, one more thing that I want to cover. This was done brilliantly by the IRS and I don't say that a lot about the IRS, brilliant and IRS in the same sentence, but they sent out letters to 14,000 cryptocurrency investors. I being one of them, stating that if you didn't report your cryptocurrency profits that you need to do so.

Why is that important? Well, I really wish that I had moved more of my assets into my self-directed IRA earlier. Being an investor since 2013 in Bitcoin, the profit and the tax if I was to sell some of those assets that had been sitting in the same wallet for six years now would be pretty substantial. Getting those assets into a self-directed IRA is a great way to allow them to grow in value and to be able to reinvest those profits into future projects, whether they be real estate, other small businesses, or other asset classes, without giving up a huge chunk of your profits back to the government.

Man, that's the right way to go, so I highly recommend that you check out in the newsletter there's some information about the cryptocurrency self-directed IRA offered by Equity Trust. How about a phone call with the team, check out what they have to say, see if it's a good fit for you, and really protect those profits going forward.

We're seeing a lot of new progress on the futures markets, TD Ameritrade getting their first futures back contracts approved.

Lastly, I'll leave you with this. Recessions are good. Recessions are healthy. They re-stabilize the market so that we can get back into another sustained bear market. Artificially inflated markets are never good. They tend to crash harder than ones that are left to run natural cycles. Which one are we in? I'll leave that up to you or check back next month so we can see what the data tells us.