Bitcoin Is Up 30% This Year – Here’s Where It’s Going Next

Plus, Fidelity's new survey shows advisors back on board with crypto

Ric Edelman: It's Friday, January 27th. I want to talk with you today about crypto because I made a comment earlier this week on this podcast that has resulted in a lot of head scratching and people wanting to know, Ric, why did you say what you said? I said that by summer of 2025, Bitcoin's price will be around $150,000. That's what, a 7x return in the next two and a half years? Why on earth would I make such an audacious prediction?

Well, that's what I'm going to explain to you right now. You have to understand that what's coming not in the summer of 2025, but much earlier in March of 2024 (that's just a little over a year from now), is going to be the next Bitcoin halving. You see, the way the Bitcoin works is that there are a grand total of 21 million bitcoins that will ever be released. 19 million of them so far have been released. We've only got 2 million more to go. These bitcoins are being released on a set schedule. This is the way that it works. Every 10 minutes new bitcoins are released and approximately every four years, the number that are released every 10 minutes is cut in half.

You see, when Bitcoin was first created back in 2009, those block rewards, as they're called, those release of new bitcoins occurred about every 10 minutes. And there were 50 at a time that were released. In 2012, the number was cut from 50 to 25. The next halving occurred in 2016. The number of bitcoins went from 25 to 12 and a half. In 2020, it was cut to six and a quarter. And around March 22nd of 2024, the bitcoin halving will occur again and the number of new bitcoins that are released every 10 minutes will be cut from the current six and a half bitcoins to three and an eighth. This process repeats all the way until the very last bitcoin is released in the year 2140. Yeah, 120 years from now.

Now think about this. If you're a bitcoin miner, if you're one of the people who's involved in getting those new bitcoins released, you are doing this because you get that mining reward, the block reward. That's your compensation for doing the work of maintaining and securing the Bitcoin network. Well, if you're currently receiving six and a quarter bitcoins for your efforts and suddenly your reward is cut in half from six and a quarter to three and an eighth, your pay is cut in half.

Well, what the halvings have shown us over the past decade is that when the number of bitcoins gets cut in half, the value of the bitcoins doubles to preserve the economic value of those block rewards. That's true. Historically. You see, this is nothing more than supply and demand. If the supply is getting cut - the number of new bitcoins getting cut in half - the supply is getting cut, but the demand stays strong, well, the price has got to rise.

And historically, indeed, every time there's been a halving, the price of bitcoin hit a high about one and a half years later. If history repeats itself, bitcoin hit a bottom in November of 2022, a couple of months ago. It'll rally in early 2024. We're already experiencing that with bitcoin up nearly 30% so far this year, and then it'll peak in the summer of 2025 at another new all-time high, around $150,000.

All I'm doing is extrapolating historic price performance and the market cycles of bitcoin to what will happen over the next two and a half years. This prediction is not terribly outrageous, as you'll soon hear later in this podcast what others are predicting that are even more optimistic than what I'm suggesting.

Now what we need to understand is that three out of four people who own bitcoin right now have lost money on it. That's according to the Bank for International Settlements. That means three out of four people bought their bitcoin somewhere between the summer of 2021 and the winter of 2022 when bitcoin was above $20,000. But guess what? With bitcoin now again over $20,000, most people are again in the black. 

And if you believe what I just said about the upcoming Bitcoin halving that's coming up in March of next year, well, you ain't seen nothing yet. And we need to put this into perspective. Even though bitcoin fell 65% last year, a lot of investments did even worse in Great Britain. Long-term government bonds lost 80%. They did even worse than bitcoin. And they promise guarantees. Bitcoin certainly does not. You would wonder what everybody’s attitude about bitcoin was, given the fact that it lost so much money last year.

Fidelity’s new survey shows advisors back on board with crypto 

(3 mins)

Well, amazingly, last year, despite the fact that bitcoin fell 65% - 70% in value, the number of adults who own bitcoin here in the US increased 10% last year. 22% of US adults now own Bitcoin. Fidelity, in fact, has a division called Fidelity Digital Assets. They just released a survey that they did of 1,000 financial professionals, not only here in the US, but all across Asia and Europe, high net worth individuals. They surveyed financial advisors, family offices, hedge funds, venture capital firms, endowments, foundations, pension funds, defined benefit plan managers. They surveyed all these folks and the overall attitude about Bitcoin, the level of positive views rose last year in 2021. 45% of these professionals had a positive perception of Bitcoin. Now it's not 45%, it's 57%. Even though bitcoin has fallen dramatically in price, more people than ever have a good view of it. 74% of those surveyed plan to invest in digital assets. 

That's up from 71% last year. Only 19% say it shouldn't be part of your portfolio. And another study of institutional investors who are asked about their attitude about digital assets, 41% said they already own crypto and 91% said they're interested in investing in it. And they say it will ultimately represent as much as 29% of their portfolios. Now, you know me, my recommendation is low single digits. These institutional investors saying it's going to ultimately reflect 29% of their portfolio - nearly a third, that's really saying something.

And just look at what Bloomberg Businessweek did. Their entire October 31 edition had just one story.  Picture your favorite weekly or monthly magazine. You open the magazine to find one story. It was a 40,000-word article called The Crypto Story. This was a big deal. And there are three reasons why. First, Bloomberg is widely regarded as perhaps the most influential and respected business news outlet in the world. Second, the article was written by a guy named Mark Levine. He's a highly respected financial writer, used to be an investment banker at Goldman. He was an M&A lawyer before that, and now he's been writing for Bloomberg for a long time. And for him to have agreed to write this crypto story, well, that's, you know, pretty credible stuff. And third, well, for Bloomberg to devote an entire issue to crypto and for Levine to write a 40,000-word story...I mean, he wrote the equivalent of a 160-page book.  

So this is pretty significant. This isn't all make believe. What's happening in the world of crypto, it's all happening right now and with amazing speed. In Japan, the central bank of Japan, called the Bank of Japan, is working on a central bank digital currency. They're doing this in combination with three of the biggest banks in the country. A central bank digital currency (CBDC). It's digital money is what it is. Here in the US, we would call it a digital dollar. Instead of you having paper money in your pocket or purse, you would have money that's on your phone just like you have airline miles or the cash you have in your Venmo or PayPal account. Japan is not alone in this, not by far. China already has their central bank digital currency. So do the Bahamas. They launched theirs three years ago.

South Korea has now launched a replica of its capital in the Metaverse. Users can take their avatars, your digital version of yourself, to a tax office. In this Metaverse capital, you can access youth counseling. You can read e-books. Soon, this virtual version of Seoul is going to expand to offer real estate and foreign investor services and other blockchain technologies. South Korea is spending $200 million on its metaverse projects. They're even giving away grants to universities. Japan is doing this too, tied in with their work on their CBDC. They're going to invest in non-fungible tokens and their own Metaverse services. Kazakhstan's central bank is testing its own CBDC as well.

In Hong Kong, they're planning to legalize retail trading of crypto. The country is lifting a ban on retail trading, reversing the policy. The government says the goal is to attract investors and companies into the city, including those who left when Hong Kong imposed their restrictions in the first place. In Singapore, the largest bank in the country just settled securities trades using JPMorgan's Blockchain Trading Network. The trades were settled in hours instead of days. You didn't even know JPMorgan had a blockchain trading system, did you?

In Thailand and Hungary, these countries are 5,000 miles apart, but they've signed a bilateral agreement to support the introduction of blockchain technology in each other's countries, the Thai FinTech Association and the Hungarian Blockchain Coalition. They're going to share experiences and best practices and explore opportunities for direct cooperation. 20% of the world's crypto holders are in Thailand. Thailand's central bank is testing a CBDC. El Salvador just opened a bitcoin office in Switzerland to promote Bitcoin in Europe.

Costa Rica is becoming Bitcoin-friendly as well. Crypto is not going to be taxed when you use it to buy stuff and if you make money with crypto, you buy it. It goes up in value. The profits are going to be tax-free as well. Government officials say that these new policies are going to attract - you guessed it - foreign investors and fintech companies, creating jobs for Costa Ricans. India's central bank has announced they're testing a CBDC.

Crypto in Africa

(2 mins)

The Central African Republic has set up a committee to integrate their digital coin (called the Sango coin) into the national economy. They legalized bitcoin last year, the second country to do so after El Salvador. This is important that the Central African Republic is doing this because 57% of the people who live in Africa don't have a bank account. Cash is still used in 90% of all transactions. When's the last time you used cash? You use credit cards, debit cards. You use PayPal and Venmo and Square.

90% of all transactions in Africa are cash. 75% of sub-Saharan Africa doesn't even have access to the Internet. And so now you've got all kinds of companies - Fawry Interswitch, M-Pesa, Orange Paga Wave, they're transforming the African economies.

There are now 2,500 fintech companies in Africa, and they're providing online payments, point-of-sale payments, retail lending, wealth management, insurance banking and crypto services. Their combined revenue is $6 billion. They've created 300,000 jobs directly and another million jobs indirectly across the continent. All of this because of this new technology in China. They've now allowed their digital currency to be used to buy securities for the first time. Even Putin is getting in on this. He's calling for a new system of international settlements based on blockchain and digital assets. 

The Central Bank of Russia is looking to integrate crypto into its financial system. Brazil and South America - the second largest bank there has launched a tokenized bond using blockchain technology. The Central Bank of Brazil plans to launch its CBDC by 2024, and it recently passed a law creating a regulatory framework for crypto allowing bitcoin to be used as payment.

There's a lot of stuff going on all over the world - Africa, Asia, Europe, the Middle East, South America. What about the United States? Well, the state of Texas is considering a bill right now that would make bitcoin an authorized investment asset. They'll give tax breaks to bitcoin mining companies, and they're even going to require that Bitcoin be taught in schools.

Major US companies - Amazon, Alphabet (parent of Google), Microsoft, Accenture, they're all working with central banks around the world to help them launch their CBDCs, their own local digital money. These companies are going to make a fortune helping these countries operate their digital currencies. Overstock.com has helped Nigeria and the Eastern Caribbean Central Bank launched their CBDCs. So far, 11 countries have done this. 15 more have started pilot programs, 72 are in the development stages. So yeah, companies are all over this. Fidelity now trades in custody Ethereum for its clients. It's been doing this for bitcoin for years. And BNY Mellon, the oldest bank in America, founded by Alexander Hamilton, they're now providing trading and custody for Bitcoin and Ethereum as well. 

The CEO of Bank of New York, Robin Vince, says digital asset custody is an important foundational capability for the future of financial markets. Apollo Global Management, they're one of the world's biggest asset managers. Nearly half a trillion dollars in assets. They're now providing crypto custody through a partnership with Anchorage Digital. Anchorage is the first federally chartered digital asset bank in the US. BlackRock, the world's biggest money manager, they're in on the game, too. They're partnering with Coinbase. Google is letting users pay for its cloud services with Bitcoin this year. Betterment has launched four crypto portfolios. Franklin Templeton and Ark have both partnered with Eaglebrook Advisors to allow financial advisors to give their clients a crypto customized portfolio. Wow.

How blockchain tech will add $2 trillion this decade

(3 mins)

In the face of all this, you've got to understand why. Why are all these countries, why are all these companies, why are all these institutions so excited about blockchain and digital assets? Why are they all racing to engage in all of this? Here's why they're doing it. Blockchain technology, according to Grand View Research, is going to grow 10X over the next four years. This is going to add, according to U.S. nearly $2 trillion to the global economy by the year 2030. That's just seven years from now. And that's why 90% of the world's banks are developing blockchain technology today. JPMorgan Chase says blockchain is going to save banks $120 billion a year. 

It's all because blockchain technology lets businesses operate faster, cheaper, safer with greater transparency and inclusion. Now you know why PayPal is letting its users buy and sell stuff with Bitcoin on its site. When I say its users, they have over 300 million users around the world. They have 24 million merchants, and now all of them can together use bitcoin to buy and sell merchandise. Walmart's installing Bitcoin ATMs at its stores nationwide. You can now make charitable donations in bitcoin with thousands of charities around the country. You can now make political contributions in bitcoin. Yeah. The Federal Election Commission says that's okay.

States across the country, including Colorado, are allowing taxpayers to pay their taxes in bitcoin. Colleges, including Wharton and Bentley University, are letting you pay tuition in bitcoin. You can use this technology for file storage, graphics, processing, cloud computing. You can engage in contracts through digital tokens. No lawyers involved. You can use this for digital asset management, loyalty rewards, crowdfunding, lending and borrowing insurance.

Now you're beginning to get an idea as to why this is so exciting, why so many countries, so many companies, so many institutional investors are paying so much attention to this. So when you look at my price prediction that bitcoin is going to hit $150,000 in value by the summer of 2025, I'm not the only one saying stuff like this. JPMorgan Chase has set a price target for bitcoin of $140,000. Pretty much the same thing as me. Tiburon Strategic Advisors also says bitcoin will hit $150,000. Standard Chartered, one of the biggest banks in Great Britain, says bitcoin will hit $175,000. Citibank's Global Head of Technicals, Thomas Fitzpatrick, says bitcoin will hit $318,000. Guggenheim says the price of bitcoin will hit $400,000. Cathie Wood of Ark Investments says Bitcoin will hit $1 million in value by 2030. And Blockware Solutions says the ultimate price of Bitcoin could reach $23 million. Today, it's $23,000. Now you know why the Association of Governing Boards of Universities and Colleges says that cryptocurrency has already produced hundreds of millionaires, a number of billionaires, and may produce the world's first trillionaires in the next decade.

Why does the Association of Governing Boards of Universities and colleges care? Because this organization is devoted to helping colleges and universities grow the size of their endowments. How do universities increase the size of their endowments? By getting donations from wealthy alumni. Increasingly, how do alumni get wealthy? By them investing in crypto. So if you want to find rich people, look for people today who are buying digital assets. And now you begin to understand why there's so much excitement about digital assets. I tell you that you should have a small, low, single digit allocation to your diversified portfolio in crypto because I'm convinced it's one of the most significant opportunities for wealth creation of this decade. 

And if you'd like to learn more about understanding all of this, what is it? How does it work? Why should you care? Read my number one Amazon bestseller, The Truth About Crypto, just named Book of the Year by the Society of Business Writers and Journalists. It just got another book review this week. It was called one of the best cryptocurrency books of 2022. The Truth about Crypto, a straightforward guide and accessible informative read. Highly recommended.

Cary Grant Explains Life After Death in Jean’s Word of the Week segment 

(2.5 mins)

Jean Edelman: Recently, Ric and I found Turner Movie Classics (TMC). They were playing 24 Hours of Cary Grant. Wow. So much fun. We recorded all of them. And so when I went back, there was this movie I'd never seen before. It was called Houseboat. I'm going to play a short clip of the movie for you. I was so moved by this one scene. Cary Grant, he's divorced from his wife and she passes away. And so he returns to raise the three children. And this is a scene that he is explaining life and death to his son. I hope you enjoy this scene. 

CARY GRANT: Let me try to explain it to you. See this picture? Well, try to think of this picture as being me. My body. Now, the picture of its own, has no use at all except as a container for something. And in this case, a container for the water, which you can think of as being my life force. Now, try to lose that.  

CHILD: Okay, that's easy. There. 

CARY GRANT: Well, the only thing is it didn't last. You see it's part of the whole river. It's still in the universe. You haven't lost it. Come on, get rid of it. 

CHILD: Well, what about this? 

CARY GRANT: What about it? 

CHILD: Oh, I get the idea. It'll evaporate, become a cloud and come down someplace else as rain. 

CARY GRANT: That's pretty clever of you. 

CHILD: I guess when you come right down to it, you can't lose anything. 

CARY GRANT: Probably not even life itself. It's just that everything is constantly changing. So perhaps when our life force, our souls leave our bodies, we go back into God's universe and the security of being part of all life again and of all nature. So for all we know, that sort of life after death may be very beautiful. 

CHILD: If you say so. Hey pop, don't do anything beautiful for a while, will you? 

CARY GRANT: I'm trying not to. 

CHILD: And give up smoking. It's bad for older people. 

Jean Edelman: This is such a beautiful, beautiful scene. I have never seen any person describe life and death so beautifully and with so much love and compassion. And so my word this week is very simple. It's SOUL.  

The S is to See. To see how we are all connected and part of this human collective. We matter and have so much to bring to this world. So we need to see our light, We need to see our beauty, and we need to see that we never really go away.  

The O is for One. There is only one of us. This beautiful word. This one. It just creates unity. This one humanity, this one planet, this feeling of unity. And hopefully we all find our way to understand that as we go through our journey of life.  

U is for Unity. This collective being supportive. We need each other. We are not separate islands. We are all needing each other. We all have something to share. We all have something to give and we can all support each other in some way. We are never alone.  

And the L is for Love. To love ourselves and to love others, and to see each of us as a soul, that we all deserve to be here on this earth at this time. We need to stop judging, stop projecting ourselves onto others. See each other as beautiful, beautiful people with one purpose: to live a joyful, wonderful life and to contribute to this wonderful collective, this one humanity, this one earth.  

And so I hope you enjoy this scene. I hope that you'll play it over and over again. And just to hold in your heart how beautiful it is and how we are just a wonderful humanity. Have a great week, everyone. 

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