Bitcoin holders just got whiplash… Last Tuesday, the world’s first and most famous cryptocurrency hit an all-time high of $64,836. As I (Chris Lowe) type, it trades at $55,254. That’s a 15% drop. And at one point, bitcoin (BTC) was down by as much as 20% from its peak last week. The standard definition of a bear market in stocks is a 20% drop from a peak. Bitcoin did that in just six days. That kind of volatility would put off a lot of investors. If you recently invested in bitcoin, you may feel a tense knot forming in your stomach. And no doubt, folks in the mainstream media will make a big deal of the drop. We can expect to hear all sorts of half-baked theories about why bitcoin dropped when it did. But don’t get sucked in… What happened over the past week is just bitcoin being bitcoin. Last month, colleague and world-renowned crypto investor Teeka Tiwari predicted in these pages that bitcoin will 10x from here and smash through the $500,000 mark within the next five years. And as he hammers on all the time, shouldering this kind of volatility is the price you pay to earn those returns. That’s why today, I’ll show you why bitcoin’s recent plunge is nothing to worry about. I’ll also pass along some recommendations from Teeka on how to make sure you have as robust a crypto portfolio as possible. Bitcoin is up 1,246% since its low last year… Even after its recent drop, it’s still up 92% so far in 2021. So the drop isn’t all that significant. Bitcoin fell as much as 23% in February – from $58,330 to $43,241 – and you probably don’t even remember it. Here’s the thing… Volatility is par for the course with bitcoin. The table below shows bitcoin’s annual returns from 2010 to 2021. And it compares them with the annual returns for U.S. stock market bellwether the S&P 500. 
Over that time, bitcoin returned as much as 9,900% a year. And it delivered an average annual return of 1,576%. That compares with a return as high as 30% for the S&P 500 and an average annual return of 12%. | Recommended Link | | YOU NEED TO SEE THIS INVESTMENT ALERT (ASAP) Former hedge fund manager Teeka Tiwari just made a shocking announcement. He called an all-hands-on-deck meeting for Wednesday, April 21st, at 8 p.m. ET. All about something he calls the “Anomaly Window.” Likely not 1 in 1,000 investors know about it. The Nasdaq calls the strategy surrounding this event “one of Wall Street’s best-kept secrets.” And Teeka believes it could help you buy back 20 years of your life… in weeks. However, you need to act post-haste if you want to take advantage of it. | | | -- | Bitcoin was the superior investment – by far… But to earn that higher return, you had to stomach higher volatility along the way. 
The three steepest drawdowns for the S&P 500 were 17%, 22%, and 34%. By contrast, bitcoin investors have had to stomach drawdowns of 83%… 85%… even 94%. So we’re talking about drawdowns between three and four times as steep for bitcoin as for stocks. Trump's bold $456 million bet If you can’t handle that kind of volatility, you’re not going to earn the incredible kind of returns bitcoin has delivered. This is also true for wealth building outside of crypto… Take Amazon.com (AMZN). Its shares have been one the greatest wealth-building vehicles in history. Since going public in 1997, Amazon’s share price has climbed 225,533%. 
That’s enough to turn every $10,000 into more than $22 million. But to earn those gains, you’d have had to suffer through drawdowns of 56%… 65%… and even 94%. Apple (AAPL) is another example… Since it went public in 1980, its shares have shot up 136,729%. 
That’s enough to turn every $10,000 into nearly $14 million. But to realize those gains, you’d have had to go through a 91% plunge in the dot-com crash. And there were several drawdowns of 40% or more to challenge you along the way. The fundamental case for bitcoin remains strong… Teeka believes bitcoin will roughly 10x from today’s level to break through the $500,000 mark… in the next several years. As I’ve been writing to you about in these pages, bitcoin has reached a tipping point in terms of mainstream adoption. The more folks seek out bitcoin as a long-term store of wealth, the higher its price goes. Remember, bitcoin’s new supply halves every four years until we reach the hard cap of 21 million bitcoins. And when rising demand meets falling supply… prices MUST go higher. That doesn’t mean bitcoin will go up in a straight line. Teeka… We’ve seen how volatile bitcoin can be. In the 2018 “Crypto Winter” bear market, bitcoin plunged as much as 84%… only to rocket to new highs this year. I’ve said for years volatility is the price you have to be willing to pay for life-changing gains in crypto. You won’t see these huge up cycles without some huge down cycles, too. There are many people who aren’t willing to pay that price. There’ll be folks who bought bitcoin at $62,000… and watched it drop to $56,000… who will panic and sell. You’ll see it happen again and again. It’s the nature of most humans. They’re just not wired to make a lot of money from a volatile asset. The lesson is clear… To make money in bitcoin, you need to know how to sit out this kind of volatility. Becoming psychologically resistant to volatility is hard work… It’s not something you learn overnight. It often takes years to figure out how to resist the urge to follow the crowd and panic sell. Fortunately, there are some simple steps you can take to make sure you hold through the inevitable dips. The first is to always pay attention to how much you’re invested in bitcoin as a portion of your overall wealth. Teeka recommends you set aside 10% of your portfolio for bitcoin and up to 2% for other cryptocurrencies. That way, even a 50% drop in bitcoin will translate into just a 5% drop in your overall portfolio. That’s unpleasant. But it’s not a big enough drop to compel you to panic sell. You also want to hold a diverse basket of cryptos… Within your crypto portfolio, Teeka recommends small, uniform position sizes. That means not overconcentrating in one or two crypto assets. Instead, you should put an equal amount into a wider range of cryptos. That way, if one crypto you own takes a hit… it won’t drag down your entire crypto net worth. I’ll leave Teeka with the last words… My job is not only to find great ideas for you. It’s also to make sure you survive the rough times… help bring you through… give you courage in your convictions… and get you across the finish line. So don’t give up at the one-yard line. Don’t sell your bitcoin because of this pullback. Trust the research. Follow sensible asset allocation and position sizing guidelines. And let time do the heavy lifting. In the mailbag: “Don’t sugarcoat what Bernie Madoff did”… One of America’s most notorious conmen, Bernie Madoff, died in prison last week. He masterminded a “Ponzi” scheme worth about $64.8 billion – the largest in history. Over at Bill Bonner’s Diary last Friday, Legacy cofounder Bill Bonner compared Madoff’s scam and the feds’ financial policies… Bernie Madoff was no saint. But he never forced anyone to give him money… never counterfeited money to pay his creditors, never tried to debase his clients’ money, and never falsified the whole financial world in order to keep his scam going. And he never caused a horrible inflation that will plague the whole nation, even innocent bystanders who never heard of him. Bill’s essay prompted some strong responses from your fellow readers… You seem to put Madoff on a pedestal when you compare him to the government. You are a strange individual. If you use the government to compare anyone against… all crooks would look good. Madoff was a terrible person. He destroyed many lives. He deceived thousands of people. You seem to think if investors got 78% of their money back, they should feel good. You need to remember that Madoff was a crook… plain and simple. Please don’t attempt to sugarcoat what he did. You make yourself look foolish. – Michael P. How many arms did Bernie twist? He used the same scam the Chinese used to attract so many corporations – good, old-fashioned greed. Works every time. If the government wants to borrow to sell the illusion of a bigger pie, so be it. While the have-nots are scrambling, this gives some of us time to retreat to our very safe boltholes. – Eunice H. One more virtue of Bernie is he took money only from people who could afford to lose it. I doubt that many – if any – of those who lost money when his scam came to light missed any meals or went homeless. When the Fed/U.S. Treasury scam blows up, it will be another story! – Gordon F. Bill, you have hit it out of the ballpark with your Bernie missive! It is so good to laugh aloud when one is confined alone! Your wordsmith talents are greatly appreciated. – Maryellen R. Was Bill wrong to liken Madoff’s fraud to America’s monetary policy, as Michael claims? Or do you agree with Maryellen that Bill “hit it out of the ballpark”? Tell us what you think at feedback@legacyresearch.com. Regards, Chris Lowe
April 19, 2021
Barcelona, Spain Like what you’re reading? Send your thoughts to feedback@legacyresearch.com. IN CASE YOU MISSED IT… How Biden Could Destroy the U.S. Dollar? A former vice president of a major investment bank is trying to warn you about what's coming… The U.S. dollar is in free fall… And many analysts are predicting the crash will continue under President Biden. Banks across the country are already preparing and you should do the same. For decades we've heard rumors of a dollar crash… But what's happening behind the scenes now is stunning. This new banking rule will change everything. Click here to see what's happening to our banking system and how to prepare. 
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