The Fort Knox of Crypto

What you need to know about “The Bitcoin Act” September 12, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Everyone knows “The Bitcoin Act” is a crazy idea. But is it crazy enough to work? Plus, Davis Wilson issues a warning! The Fort Knox of Crypto CHRIS CAMPBELL Dear Reader, In 1803, the United States was still a young, fragile nation, barely three decades old. The idea of spending $15 million—an enormous sum at the time—on a vast expanse of largely unknown land seemed like madness. Many questioned the value of this wild western frontier, calling it an empty wilderness, a political gamble. The diplomatic situation was delicate too. Spain, which had previously controlled the territory, could have objected. Jefferson wasn’t entirely sure the purchase was legal. There was a very real possibility that it would blow up in his face—financially, diplomatically, or politically. But France, under Napoleon, was desperate for cash to fund its wars. And this opportunity to double the size of the nation overnight probably wouldn’t happen again. It worked. The Louisiana Purchase didn’t just pay off—it transformed the United States into a continental power, opening the door to westward expansion and securing its economic future for generations. The U.S. is no stranger to making bold, seemingly reckless bets. Fast forward a century, and we might be facing a similar bold, if seemingly impossible, gamble: Bitcoin. Yes, the Bitcoin Act Recently, U.S. Senator Cynthia Lummis proposed what, to many, sounds like complete insanity: The Bitcoin Act. In effect, the Act would establish a Bitcoin Strategic Reserve—a Fort Knox of crypto. The U.S. would hold 1 million Bitcoin in cold storage, amounting to 5% of the total supply. Of course, the U.S. wouldn’t be the first. Countries like El Salvador have already adopted Bitcoin—viewing it as an asset that can operate independently of their struggling economies. But, as usual, the devil’s in the details. So, how would it work? Two ways. First, the plan is to fund the Bitcoin purchase program using surplus earnings from the Federal Reserve. The first $6 billion in annual earnings from the Federal Reserve’s net profits (between 2025 and 2029) will be allocated to buy Bitcoin. These earnings come from the Federal Reserve's assets, such as interest on U.S. Treasury bonds. Second, revaluing the U.S. gold certificates. The U.S. owns certificates that show how much gold it has. These certificates are still valued based on the price of gold from the 1970s, which is way lower than today: $42. Lummis wants to revalue these certificates to match current gold prices. This would create billions in new value without having to sell any gold. The plan involves revaluing these gold certificates and using the difference to purchase Bitcoin over the next five years. In short, the funding would come from the Federal Reserve's existing surplus earnings and a revaluation of its gold certificates, rather than new taxes or direct borrowing. OK. But why would we do this? Lummis frames it as an effort to protect the U.S. against financial crises, cut our national debt in half by 2045, hedge against inflation, and… If all goes well… Cement Bitcoin as a core component of the future global financial system. All in one fell swoop. The critics, of course, are howling. They say it’s crazy. Bitcoin is volatile, speculative, and untested on the scale of a national reserve asset. And sure, there’s an argument to be made there—Bitcoin’s value has seen wild swings, and many skeptics believe it's still too early to treat it as “digital gold.” Another objection is that holding Bitcoin could weaken the U.S. dollar. Lummis disagrees: By adding Bitcoin to the U.S. reserves (alongside assets like gold and land), the government would diversify its holdings. This creates more stability in times of economic uncertainty. Here’s the big takeaway. Even if this doesn’t pass… It does show one thing: For a long time, Bitcoin and other cryptos have been seen as fringe assets, often associated with speculation, dark web transactions, or tech enthusiasts. Having a high-ranking politician like Lummis propose this marks a turning point. Yes… There’s always a chance of failure, but history shows that often the craziest ideas yield the biggest returns. Another thing: Everyone knows the Bitcoin Act is a crazy idea. When everyone knows it, it’s not as dangerous. But sometimes really crazy ideas come in glittery packaging so they don’t seem crazy. Below, our own Davis Wilson is going to cover one such idea outside of crypto. Chances are, someone has already promoted this new type of investment vehicle. Consider this your warning… Read on. Mark Your Calendar – Monday, September 16 You've been personally invited to join [this exclusive list]( to receive real-time trade alerts from our expert trader on Monday. Only select readers will get access to a potential 100% profit in just 24 hours. [Reserve your spot now to get the details before it's too late]( Warning: Don’t Get Burned By Hot New Stock Funds DAVIS WILSON Consider this article your warning. There’s a new type of investment fund being actively promoted to retail investors like you. It's called a leveraged single-stock fund. Simply put, these funds give you a “leveraged” return on a single stock. For example, yesterday Nvidia (NVDA) closed higher by 8.15%. The GraniteShares 2x Long NVDA Daily ETF (NVDL), which gives investors 2-times the daily return on NVDA, closed higher by 16.3% — exactly twice as much. ETFs like this are a booming business. You can find leveraged funds on Meta, Apple, Tesla, Alphabet, Amazon, Coinbase, the list goes on. Bloomberg estimates about $13.4 billion is currently invested in these funds only two years after they were first introduced. Unfortunately, these funds don’t come with a warning label. Many investors have been burned badly, which is why I write to you today. It’s important to understand that returns are calculated on a daily basis. So whereas Nvidia (NVDA) is down 6% since the beginning of July, this doesn’t mean NVDL is down exactly 12%. In fact, NVDL is down nearly 23% over that same time period. That’s because a few large moves in either direction can have a big impact when compounded daily. Here’s an easy example to show you what I mean. Say NVDA stock trades at $100 and then: - Rises 5% on Day 1 to $105. - Rises 5% on Day 2 to $110.25. - Falls 15% on Day 3 to $93.71. Following the pattern above, this would mean NVDL: - Rises 10% on Day 1 to $110. - Rises 10% on Day 2 to $121. - Falls 30% on Day 3 to $84.70. After Day 3, NVDL plummets to $84.70 after a massive 30% drop. While NVDA stock dropped 6.3% in total, NVDL dropped 15.3% over the three days — more than twice that of NVDA. This simple example only takes place over three days. You can imagine how over weeks and months of volatile trading (like we’ve seen recently) the losses can compound. Another good real-world example is the GraniteShares 3x Long MicroStrategy Daily ETP. This fund returns 3-times the performance of MicroStrategy, a popular stock among Bitcoin enthusiasts. However, while MicroStrategy is higher by over 100% this year, GraniteShares 3x Long MicroStrategy Daily ETP is down over 80%, mostly because of a few days when the stock sank sharply. Unfortunately, many investors believe these leveraged funds will give them 2x or 3x the performance of a stock over whatever time period they hold the fund. As you can see, this is far from the truth. These funds should only be held for a few days max, and even that’s borderline gambling. Consider this article your warning. Regards, Davis Wilson For Altucher Confidential Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. NVIDIA SHOCKER: Scheduled for October 9 The next few weeks will be a critical turning point in investing history. Nvidia is expected to unleash the next generation of artificial intelligence - AI 2.0 - on October 9 - immediately separating the world’s population into 2 groups: Those that invested in AI 2.0 before their announcement… and those who waited until after. We are on the cusp of a potential 100x wealth window over the long term. [Learn how to get in on it here.]( ☰ ⊗ [UPDATE PREFERENCES]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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