Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Pre-COVID US Economy Wasn’t All That Great Either - 4th Dec 20
Bitcoin Breath Taking Surge - Crypto Trading Event - 4th Dec 20
Platinum Begins A New Rally – Gold & Silver Will Follow - 4th Dec 20
Don't Let the Silver (and Gold) Bull Shake You Off! - 4th Dec 20
Stronger Risk Appetite Sends Gold below $1,800 - 4th Dec 20
A new “miracle compound” is set to take over the biotech market - 4th Dec 20
Eiro-group Review –The power of trading education - 4th Dec 20
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Bitcoin Is Far Too Risky for Most Investors

Currencies / Bitcoin Jul 17, 2019 - 10:36 AM GMT

By: Robert_Ross

Currencies

Bitcoin is a polarizing topic. Some economists think Bitcoin’s value should be $0. Others think it’s as revolutionary as the internet.

But one thing is certain: The price of Bitcoin is incredibly volatileThis makes it a non-starter for most income investors.

Fortunately, I’ve zeroed in on a company that actually benefits from Bitcoin’s volatility. It’s a safe and stable way to profit from Bitcoin without exposing yourself to a lot of risk.

But first, let’s take a closer look at Bitcoin’s wild price swings…


Bitcoin once shot up 1,882% in a little under a year.

It went from $998 in January 2017 to $19,783 in December 2017. That’s incredible. But it didn’t last.

One year later, Bitcoin had dropped around 83% to $4,935. You can see this in the next chart.



Now we’re back in a Bitcoin bull market. Over the last six months, Bitcoin’s price has rallied over 300%.

I’m not sure about you, but most people can’t stomach that much volatility. And frankly, they shouldn’t. Buying Bitcoin is simply too risky for most investors.

That’s why we’re coming at this from a different angle…

The Low-Risk Way to Profit from Bitcoin’s Volatility

Instead of buying Bitcoin directly, we’re looking at companies that benefit from Bitcoin’s volatility.

One of the best ways to do this is through Bitcoin’s “picks-and-shovels” stocks.

The term comes from the California Gold Rush. Most of the miners who flooded into California during the 19thcentury never struck it rich. And many went broke.

But smart businessmen figured out that selling picks, shovels, and other essentials to the miners was much more profitable—and far less risky.

The same concept applies here…

In the Bitcoin universe, the best picks-and-shovels stock is CME Group (CME). The company operates the leading Bitcoin futures exchange. (It’s also one of the only exchanges of its type.)

At its simplest level, futures contracts let people bet on how much the price of something will rise or fall.

Futures contracts also act as a form of insurance. For example, say you own one bitcoin. You don’t want to sell it. But you want to protect yourself in case the price falls. You can do that through a futures contract. It lets you lock in gains and limit your losses.

With an asset like Bitcoin, where the price could go up or down dramatically, having the option to lock in gains like that is a big plus.

CME Group is the leading company offering this big plus. And that means big money for the company...

A Billion-Dollar (Plus) Record Day

When Bitcoin’s price is on a run, as it is right now, CME makes a lot more money.

See, every time someone buys or sells a CME Group Bitcoin contract, the company takes a small fee. So when trading volume goes up, so does CME’s bottom line.

And volume is on the rise. In fact, the company reported record volume on its Bitcoin futures exchange on May 13. It processed 33,700 contracts, equal to $1.35 billion.

So clearly, there’s rising demand for CME’s services.

All Volatility Is Good for This Company

Another good thing about CME is that it doesn’t just benefit from Bitcoin’s volatility. It also benefits from stock, bond, and currency volatility.

With trade war news rag dolling markets and stocks at all-time highs, now is a good time to hold companies that benefit from volatility.

CME group also pays a safe and stable 1.6% dividend. Then there’s the cherry on top: The company has a history of paying a special dividend every year. So a special dividend could more than double CME’s dividend yield.

While Bitcoin futures only make up a small part of CME’s business, the rising interest in cryptocurrencies—which are now a $350-billion market—should continue to drive interest in their platform.

So, while Bitcoin is too risky for most investors—remember that 83% price drop—you still have an opportunity to profit from Bitcoin’s bull run by investing in a safe and stable company like CME Group.

The Sin Stock Anomaly: Collect Big, Safe Profits with These 3 Hated Stocks

My brand-new special report tells you everything about profiting from “sin stocks” (gambling, tobacco, and alcohol). These stocks are much safer and do twice as well as other stocks simply because most investors try to avoid them. Claim your free copy.

By Robert Ross

© 2019 Copyright Robert Ross. - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules