Will Cryptos Ever Come Back?

Written by Nick Hodge
Posted September 12, 2018 at 4:45PM

Will cryptos ever come back?

That’s one of the questions I’ve been asking myself lately. (Always be asking yourself multiple questions.)

I was fast to criticize their meteoric rise last year, warning you in July 2017 that:

Bitcoin's exclusivity — like gold — is one of the primary things that originally made it valuable. Only a finite amount could be “mined.”

But where's the value if a new cryptocurrency pops up every day?

I also cautioned you that young non-investors who knew nothing of valuations or market cycles had entered the market, and that they were buying crypto simply to buy it. There were 900 cryptocurrencies last July when I wrote that. It ballooned to 1,300 before the easily foreseeable crash occurred.

I warned you for the last six months of the year and early into 2018 (here, here, and here) that creating so many cryptocurrencies out of nothing meant they all couldn’t be valuable.

But I wasn’t only being negative. I’m not a crypto hater.

In fact, I was telling my readers to buy Bitcoin as early as 2013 — a half decade ago.

We also more than doubled our money when Bitcoin Cash was spun out last December — during the height of the bubble. We made over 150% in less than two weeks when Bitcoin Cash started trading.

But we made sure to sell! We weren’t drinking the Kool-Aid that cryptos were going to run forever and change the world. When I told my premium readers to lock in their profits, I added:

We’re up more than 150% on our Bitcoin Cash position in less than two weeks.

This is a bubble, make no mistake. But bubbles are when the most money is made. Just don’t be the last person without a chair.

We took our chair and secured profits.

The collapse in crypto prices began later that month.

How bad’s it been?

Bitcoin Cash reached a high of $4,112 last December and now sells for $420 — a 90% slide.

Ethereum has fallen to $173 from $1,422 — an 87% loss.

Bitcoin has had the best of the worst of it, down 67% from its highs near $20,000.

Crypto Price Chart(Click to Enlarge)

The crypto-crickets have stopped chirping. Most every bullish Tweeter, Slacker, and Hodler has gone radio silent. CNBC has taken down its crypto banners and stopped running crypto specials. Goldman Sachs has delayed opening its crypto trading desk.

It actually piques my contrarian interest.

So much so that I’ve now made two personal non-direct investments in the space.

I’m not buying crypto coins. I’ve invested in companies that either have exposure to crypto mining or are using blockchain technology to improve business transaction speed, security, and accuracy.

The original mantra of Bitcoin was utility, security, and transparency…

Those were kind of lost when it went all tulip mania.

Just as I warned against the crypto price bubble, I’m now here to tell you that the technology behind cryptocurrencies is here to stay.

We may not see another price run like last year — and I hope we don’t.

But we will see select leaders emerge in various industries and use the technology to improve old ways of doing things.

And that will create a new round of riches.

Call it like you see it,

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Nick Hodge

follow basic@nickchodge on Twitter

Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street's Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.

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