Crypto May Be Under Attack, But It’s Building Momentum…
Some of you know that my Maximum Profit system occasionally spits out some unusual trades in some names that might not otherwise be on our radar.
Well, last week, it delivered one that’s involved in the wild world of cryptocurrency.
As I told my premium readers, if you’re not interested in cryptocurrency, that’s ok. It’s not for everyone. But before you completely dismiss it, just know that this week’s trade is a real company with real cash flow. It just so happens to be in the business of cryptocurrency.
Since we had never dabbled in the cryptocurrency world in Maximum Profit, I decided to bring my followers up to speed on what’s been happening. And today, I’d like to share that with you.
Because, in case you weren’t aware, it’s a lot. We’re talking about the “crypto winter” that saw cryptocurrencies tumble from their highs to government lawsuits to entire companies going out of business.
Ok, let’s dive in…
What Happened In The “Crypto Winter”…
Just a couple of years ago, cryptocurrency and decentralized finance (dubbed DeFi) were all the rage. It was everywhere. Crypto millionaires were being made seemingly overnight.
Then things came crashing down, hard. Although from an outsider’s perspective, it was no surprise things ended terribly. When folks begin spending millions trading altcoins like Dogecoin or on NFT art, it’s hard not to think of the Tulip mania bubble. For example, the Merge — an NFT digital art piece — fetched nearly $92 million in 2021. Keep in mind that this isn’t an art piece you hang on your wall.
The crypto bubble saw prices go straight up. Bitcoin — arguably the most popular cryptocurrency — saw its price soar over 1,700% in less than three years.
Then it all came crashing down. The price of bitcoin peaked near $67,000 in November 2021. One year later, it was trading for under $17,000. It lost 77% of its value.
They called it the “Crypto Winter.”
Bankruptcies & Government Lawsuits
Here’s what the crypto winter brought to many companies in the space:
- Voyager Digital, a crypto brokerage, went bankrupt.
- Crypto hedge fund Three Arrows Capital went belly up.
- Crypto lender Genesis filed for bankruptcy.
- FTX, one of the largest crypto exchanges in the world, went out of business.
And that’s just to name a few. It was a dark and cold winter for the cryptocurrency world.
Crypto and DeFi fell out of the news cycle, and people who were once touting their millions trading Dogecoin quietly retreated.
It also allowed the government to begin attacking the loosely regulated cryptocurrency world.
Regulators cracked down on all the major players in the space, like Coinbase, Kraken, Gemini, and Binance. And banks became more stringent with their relationships with crypto companies (some even got shut down).
Here’s a quick recap of what’s happened in the crypto world this year…
- Crypto’s top banking partners — Silvergate and Signature — were all shut down or seized by the government.
- Signature Bank was sold, but U.S. regulators said its crypto business must be shut down.
- Cryptocurrency platform Kraken was sued by the SEC and forced to shut down its staking services.
- Coinbase got hit with legal charges from the SEC for offering unregistered securities.
- Binance — the world’s largest cryptocurrency exchange — got sued by the CFTC for offering unregistered futures and options trading. Then hit with a lawsuit from the SEC.
Ironically, our own government holds millions in confiscated Bitcoin, which it sells through Coinbase (the very company it’s suing).
Despite the government crackdown, there’s a lot of momentum in the cryptocurrency space. The government lawsuits haven’t scared away investors. In fact, even the biggest institutional investors are getting into crypto.
BlackRock, the world’s largest asset manager with $10 trillion in assets under management, officially applied for a Bitcoin ETF (exchange-traded fund).
Charles Schwab, Fidelity, and Citadel teamed up to launch EDX Markets, an exchange to trade cryptos. Invesco filed for a Bitcoin ETF.
So, as you might have gathered, there’s a lot happening in the cryptocurrency world. That action has turned into momentum for crypto prices — and the companies operating in the space.
As a side note, if you want to stay updated on crypto happenings, you’re in luck. My colleague Brad Briggs recently launched a weekly Crypto Roundup. It’s an excellent source that will keep you informed with all things crypto. It’s a fun and easy read. You can check out his first one here. His second one, here. And the third edition, here. These are all free to read.
I also cover crypto in my other advisory Capital Wealth Letter, including how and where to invest. Go here to get the details on how you can profit…