How to Play Bitcoin's Latest Rally

By: Wayne Mulligan   One of our favorite investments is back in the spotlight: Bitcoin. Since its spectacular crash in early 2015, the digital currency has rallied with a vengeance. In just over a year, its price has doubled—going from about $214 to $424, where it stands today. In the hopes of riding this trend, you might be tempted to load up on bitcoin… But in our opinion, that would be a mistake. We believe we’ve found a better—and safer—way to take advantage of bitcoin’s comeback. What Exactly is Bitcoin? Before we reveal the best way to take advantage of this bitcoin rally, let’s review what bitcoin is. Essentially, bitcoin is the world’s first digital currency. That means you can’t hold it in your hand or stash it in your leather wallet. It’s only stored on the Internet. You can use your bitcoins to buy goods and services online—from furniture on Overstock.com, to a computer at Dell.com. Unlike the dollar or pound, bitcoin isn’t attached to or controlled by a specific country. Its price is determined solely by market forces. A currency with no central government to manipulate its value might sound appealing—but as you may have noticed with bitcoin, it can also contribute to wild price fluctuations. Bitcoin’s Second Act is Better Than its First In January of 2013, bitcoin was valued at $13. Then, within 11 months, it skyrocketed to $979. That’s a 7,400% increase in value in under a year. But then it started tumbling: by January of 2015, it was at $214—down 78%. Over the past 12 months, however, bitcoin has come back strong. In the past year, it’s more than doubled in value, rising to about $424, where it sits today. Even more importantly, transaction volume for bitcoin has more than doubled in that time. Meaning, more people are using bitcoin for its intended purpose: as a currency to purchase goods and services. Many experts predict that because of this broader usage, bitcoin’s rally will be more sustainable this time around. That being said, these are still early days for bitcoin. We’re big believers in its future, but in the near term, we expect its price to fluctuate widely. And some smart folks seem to agree with us… Follow The Smart Money In a “gold rush,” there are two ways to make money: You can either mine for gold… Or you can sell picks and shovels to the miners. Prudent investors tend to prefer the picks and shovels approach. This strategy allows you to make a great deal of money, while taking on far less risk. This is the approach we prefer with bitcoin. Rather than speculating on a volatile currency, we prefer to invest in a portfolio of “picks and shovels” companies that will benefit from the growth of the overall bitcoin ecosystem. As it turns out, some of the smartest investors in Silicon Valley are doing the same thing—they’re investing, for example, in start-ups that help consumers transact in bitcoin in simple, efficient ways. If bitcoin continues to gain adoption, these start-ups stand to do very well— regardless of what happens with bitcoin’s price. This helps explain why, according to the folks at Mattermark, investments in bitcoin-related start-ups reached $160 million in Q1 2016. That’s the second-highest quarter for bitcoin start-up investments ever. How You Can Get Involved If you’re interested in profiting from the bitcoin trend—but you don’t want to speculate on the currency—we recommend that you copy the professional investors: Start building a diversified portfolio of “pick and shovels” bitcoin start-ups. In fact, we recently came across an exciting bitcoin start-up you can invest in right now... We can’t reveal the specifics of the opportunity here. But if you’re an accredited investor, you can learn more at SeedInvest.com. (SeedInvest is one of the high-quality funding platforms we monitor). Once you register for free, you’ll be able to see all the details. But basically, this start-up has created a way for consumers to use their bitcoin to invest directly into a diversified portfolios of stocks and bonds. Critically, consumers can do this via their mobile phones—and they can do it without converting bitcoin into dollars. A service like this is especially valuable in emerging markets where physical brokerage offices and desktop computers aren’t prevalent, but mobile phones are widely available. (In India, for example, 70% of Internet traffic comes from mobile phones.) You can learn all about this company (and how to invest) by signing up for SeedInvest here » Happy investing. Please note: Crowdability has no relationship with the bitcoin company we mention, with SeedInvest, or with any of the platforms or companies we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments. Best Regards, Wayne Mulligan P.S. At the moment, you need to be accredited to invest in this opportunity. But that’s all going to change in a few weeks. On May 16th, private start-up investments like the one we mentioned today will be open to all investors—regardless of your income or net worth. And as May 16th approaches, we’ll be hosting a series of special events to help you prepare. We’ll share more details as we get closer to the big day!

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