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Technology speculators Newsletter

The Bitcoin Price Doubled to $475 in the Past 30 Days

The Bitcoin price has more than doubled since the start of October, up from $236 to $475 as I write this article. Showing increased volatility, the price briefly climbed above the $500, before correcting back towards $450 and bouncing again to $475 today.

bitcoin price chart

The rally is being driven by Chinese buyers seeking to protect their wealth from capital controls and be able to move it freely outside their borders. The buying is so frenzied that Bitcoin trades at a premium of 10+ or more Chinese exchanges versus U.S. exchanges. Some Chinese banks have also made it easier to buy Bitcoin recently. They are now accepting direct deposits (making it significantly easier for Chinese to rotate their Yuan deposits into the virtual currency).

Buyers are scrambling to get their hands on a limited number of Bitcoin in circulation and pushing the price rapidly higher. Another reason for this sharp price increase is the fact that most of the remaining holders are strong hands, as speculators have long ago left the market. They believe in the technology and long-term promise of the crypto-currency and the blockchain technology. They aren’t looking to trade in and out, making it harder to find sellers when a rush of new buyers enter the market.

The exploding volume in China and rapidly rising prices has also led to a spike in volume on U.S.-based exchanges. Speculators are rushing to get their hands on the currency and pushing prices even higher. Bitcoin has a long way to go before returning to the previous high around $1, 150, but some are already speculating that the next move higher will easily surpass the previous high and push the price to $2, 000 at a minimum.

It is hard to say where the price will go next, but I have been accumulating over the past week with the expecation that this rally is just getting started. A recent Goldman Sachs survey of 752 millennials found 44 percent said they have used, do use or will use bitcoin. And more than 100, 000 merchants world-wide accept bitcoin for at least some payments.

If you want to buy Bitcoin, I recommend using San-Francisco-based Coinbase (we both get $10 in free BTC if you use this link).

You can also get exposure on the stock exchange via the Bitcoin Investment Trust (GBTC), which is up 100% in the past month and about 30% today alone!

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FAQ

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Q: Picking up on the title of your newsletter, what would a prudent speculator buy now? Or what are you buying, specifically?

A: Well, I could answer that by saying "everything." But the sectors we think are good are those that have performed poorly. Technology dominates our recommended list. We also like the auto sector -- we think there's tremendous value there. We like pharmaceuticals. We like the homebuilding sector. But there are a lot of companies that have been ignored, discarded, etc. This is what we do -- we buy low, sell high.

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