BONUS PERSPECTIVE
SEARCH PHRASE "BUY BITCOIN" HAS GONE FULL RETARD
Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. Likewise a score of 0 means the term was less than 1% as popular as the peak.
NOTE* PLEASE WATCH THE VIDEO AT THE BOTTOM
We have some trade setups we'll be rotating into soon that are getting close to their prime sweet spots. For now let's acknowledge the narrative & technical backdrop that's occurring in both the Stock & Cryptocurrency markets. Stock members heed up! Bitcoin is here and I assure you there is a very clear reason why this asset class is up more than 11x since the beginning of the year.
History rhymes; an exact repeat rarely occurs which is what makes investment management such a rewarding pursuit. Those who can identify the rhyme are able to profit. Investing is a craft that combines elements of macroeconomics, microeconomics, human psychology, fundamental and technical analysis. Each one of us is drawn to the stock market because we hope to build wealth via exposure to this economic growth engine. Well, we live in extraordinary times. History is not repeating itself which is confusing to many investors, but it is rhyming. There are three long term trends dominating market action. In this week’s newsletter post we will dig into one per day:
Trend #1: Pricing of Risk. Those who are stumped by the lack of volatility in traditional risk assets like gold, VIX, or even the S&P 500 assume that investors are no longer pricing risk. They keep waiting for it to happen as a repeat of history. Markets are supposed to correct because of variables like weak corporate earnings, geopolitical turmoil, or debt defaults. But this market is off script. It doesn’t respond to North Korean nuclear threats, Saudi Arabian chaos, uncertainties in the White House, Chinese debt, or weak earnings. Does that mean that risk is no longer being priced? No it does not. Risk is definitely being priced, it’s just happening in a new asset class. Bitcoin’s unprecedented climb from $1,000 to $11,000 represents the pricing of risk. I could argue that the global economic environment has never been more fragile. Nine years of low interest rates has created more than $1 trillion in derivatives as toxic debt is layered on top of more debt. Any economic hiccup that produces default could spiral into out-of-control contagion among banks and sovereign governments. Debt without sufficient growth is the ultimate jealous mistress, those interest payments never cease. Without such risk, bitcoin would not be behaving as it is. So yes, risk is being priced, it’s just happening in a new place.
As long as the financial system remains fragile and over-leveraged, we expect bitcoin to rally. Recent bitcoin price targets of $40,000 in 2018 and $1 million in 2020 are attainable as a reflection of risk profile. Bitcoin’s one year chart suggests the opportunity to hedge risk via bitcoin calls over the next three years qualifies as the single greatest investment opportunity of this generation. It took Amazon 15 years to climb to $1,000. Bitcoin did it in a week. Everything we’ve experienced regarding AAPL, momentum points, protected straddles, LEAPS and flyers is going to come in handy as bitcoin traders. Options thrive on volatility. Unfortunately we’ve dealt with a low volatile market for the last 21 months. CBOE is launching bitcoin futures this Sunday. CME is launching a week later. Consider it the calm before the storm. Bitcoin options calls is coming to the BotTrigger Stocks/Options portfolio this December.
The necessity of digital currency is truly felt in those countries that have already been damaged by poor policy. Venezuela is case study #1. Socialist policy missteps have produced endless inflation of its fiat currency. So what is Venezuela doing about it? Maduro just announced the creation of an oil-backed cryptocurrency called ‘The Petro' in hopes that this new store of wealth can rise above the debt-ridden bolivar. Knowing that a country is willing to abandon its fiat currency would appear to stimulate off-the-charts demand for bitcoin and its independence. Bitcoin is protected against inflation by limiting its float to 21 million. As an alternative within the global currency marketplace, bitcoin is the only one not drunken by money printing. History teaches that extended periods of money printing rarely ends well.
We’re eager to add exposure to bitcoin calls as a way to hedge risk in a fragile, debt-ridden economic environment. This is clearly the top trend heading into 2018. In fact, what did most of you talk about at the Thanksgiving dinner table? Odds are Bitcoin was the dominant theme discussion. Go on to the iOS app store and you'll see that the #1 searched app/phrase was "Coinbase." The stats don't lie. We see that in Google Trends, the phrase "Buy Bitcoin" has reached peak levels relative to all the other levels. Our job here at BotTrigger is to hunt alpha where yield exists. On the stock side of our alerts group we've bridged exposure to Bitcoin by finding some of the best proxy investments intended to appreciate with Bitcoin's revolutionary growing economy and commensurate price appreciation. But as we segue into 2018, you can be sure that we'll be taking increasing our activity around timing the most opportune entry times on Bitcoin call options.
Get ready everyone! "The Herd is Coming!" - Mike Novogratz