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The Opportunity for Transformational Wealth Hasn’t Gone Anywhere
By Teeka Tiwari on June 13, 2018
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Dear Reader,

Unless you’ve been living under a rock, you’ve seen the last few days in the cryptocurrency market have been ugly.

So I’ve been traveling nonstop to answer the question: Can we still make a killing in crypto or will the bloodbath continue?

In today’s update, I’ll show you what’s happening behind the scenes that proves—despite the bad headlines and low sentiment—that the crypto market is the only one that can still deliver truly life-changing gains.

Click the image below to watch the video. To read the transcript, scroll down.

P.S. Earlier this year, I attended a conference in Miami and met a guy who gave a presentation. It was incredible.

This guy ran the derivatives desk for a major Wall Street firm. He ran trades for some of the biggest “whales” on Wall Street. A whale is a huge trader or investor in the stock market. He created a system to track these whales in the marketplace, even without knowing who they were or why they were buying.

For the last six months, I’ve been privy to some of the data that he’s been generating, and it’s been scary accurate.

He’s having a special event tomorrow night on Thursday, June 14, at 8 p.m. ET, where I’ll be joining him. I don’t give my endorsement lightly. I don’t talk to you about other products or newsletters very often, but this is a guy you should definitely check out. So, click this link and you can sign up to check it out.

Transcript
Hello, friends, and welcome to this month’s Palm Beach Confidential update. I have been traveling like crazy and I’ve actually got to get on a plane in a few hours. I’ve been going around meeting with a lot of different players in the cryptocurrency space… I’ve been meeting with people that run exchanges; I’ve been meeting with traders; I’ve been meeting with hedge fund managers; I’ve been meeting with lawyers that put together crypto funds. And why have I been doing all this traveling? What has been the purpose behind that?

Crypto Bloodbath
Well, unless you’ve been living under a rock, you’ve seen that the last four, five days in the cryptocurrency market have just been an absolute bloodbath. I mean we’ve just seen sell orders after sell orders after sell orders. And what I’ve learned is you can’t be myopic. You can’t just say, “Oh, I believe this and regardless of everything else, I’m going to continue to believe this.” Something that I learned managing money is that you always have to challenge your own assumptions. You always have to be your own worst critic to figure out: Am I wrong here, or is this just simply the market playing out?

In order to answer that question, you can’t find that answer sitting behind your desk. You’ve got to leave your desk, and actually go out and meet people. My fundamental premise here with this asset class is that we are seeing a rotation from an asset being dominated by individuals to an asset that is ultimately dominated by institutions. So again, if we look back in terms of an analog for that handover in the market, it’s ’94­–’95. In ’94­–’95, individuals were running the internet stocks. There were no institutions involved.

Between ’94 and ’95, internet stocks just got hammered, and then in that period, institutional ownership stepped up, institutions stepped in, and by the end of ’95, that market was rocking. So I’ve been using really two analogs through this process. One is on the actual trading, and that analog is from 1990 to 1991, and that relationship is still holding. The other analog is with institutional ownership, which in terms of the equity market was ’94–’95.

Part of what I’ve been doing for more than a week is seeing whether the relationship that I saw in ’94–’95 (of institutions migrating to internet stocks) is still happening in cryptocurrency. Are we still seeing institutions migrate to this asset? The answer is yes, and it’s part of the reason why we are down right now… and I want to explain that. I’ve actually got a few things that I need to cover today, and I’ve got some notes, but I want to get to this first.

CFTC Investigation
The reason why we are getting clobbered right now is that the Commodity Futures Trading Commission (CFTC), which is the regulatory agency for the commodities market, needs to know that the data they are using to set the price on bitcoin futures contracts is accurate. They started reaching out to different bitcoin exchanges, different cryptocurrency exchanges, and they started getting stonewalled. These exchanges didn’t want to share their data.

CFTC says, “Look, we regulate you. We consider you a commodity. You’ve got to give us your data.” And a handful of firms said “no.” So what happened? CFTC says, “Okay, you don’t want to play ball? We’re going to show you just how big a bat we swing, and we’re going to do a price manipulation investigation.” So now the entire industry, all the exchanges, are getting investigated for manipulation.

The cryptocurrency market has never had regulation. Of course there’s been manipulation that’s taken place in that market. We’d be naïve to think that it’s never taken place. Manipulation happens every day in the equity market. You can’t think that it doesn’t happen in the cryptocurrency market… of course it does.

So what we’re seeing is this kind of knee-jerk, panic-selling reaction. There are certainly bad actors in the space. They see the CFTC coming in. They’re seeing that this is a very different world than even a year ago, and they’re dumping. What happens is this creates a cascading effect. So we’re seeing a sell-off in bitcoin. We’re also seeing a selloff in Ethereum, and that probably has something to do with EOS. EOS owns a lot of Ethereum tokens, and there’s a fear that EOS might start dumping its ether. That’s caused the price to come down.

When you have the two biggest cryptocurrencies in the market taking a hit, guess what? The whole market takes a hit. Does this mean this is the end? do we need to pack up our toys, go home, and say, “Well, that was a fun ride, let’s go next?” No, absolutely not. What’s happening here is a positive… it’s a short-term negative, but the market is getting cleaned up. The CFTC is coming in and cleaning up the market. It has to because no one is going to get pension funds—risk billions of dollars—in a market that is easily manipulated.

There have to be safeguards in place in order to allow that institutional money to come into the market… which is why I say this is a short-term negative but a longer-term positive. I’ve seen it before. I remember in the late ’80s and early ’90s, they used to call the Nasdaq the under-the-counter market instead of the over-the-counter market—it was so distrusted they used to call it the under-the-counter market… Even as late as the early ’90s, the average spread on a Nasdaq list of stock was 50 cents. The spread is the difference between the bid and the offer.

So even companies like Seagate, big multibillion-dollar companies like that used to trade with an 8% spread, and it was legal for a brokerage firm to buy Seagate on the bid, and then hold it. They could show that they were taking some risk. They would manipulate the offer. They would move the offer up another 25 cents, and then they would print the whole order at that price so they could hide the 75-cent commission on an $8 stock… then charge another 5% commission on top.

They were getting commissions that were 15% to 17%, and that was legal. That was completely legal. And then you saw the Nasdaq start to clean up its act. You saw spreads collapse. They went from an average of 50 cents down to a penny. Many markets are a fraction of a penny, and of course volume in the market exploded. The Nasdaq of the late ’80s and early ’90s was very, very different from the Nasdaq that we have today, and the same is going to be true in the cryptocurrency market. Now, a few things are going on in terms of institutions lining up to get into crypto. Let me just tell you about a couple of quick stories I have on my screen.

Institutional Framework
Coinbase just launched its index fund. It’s open for investment. This is directly from a story that it posted. Coinbase says, “We’ve seen overwhelming interest from investors since we announced the fund earlier this year. At this stage, we have opened the fund to those who wish to invest $250,000 to $20 million.” So, you’re either an institution or an accredited investor in order to get involved with this, and it’s going to be a market capitalized weighted index of some of the biggest coins in the market.

Then Coinbase acquires a financial services firm. It’s going to become an SEC-regulated broker dealer. This is the largest exchange in the world… Tens of millions of customers are going to become regulated.

Now, this news is huge. This is new. Susquehanna, a global trading and technology firm—one of the largest financial firms in the world—has just opened up bitcoin trading. It’s opened up a trading desk that’s going to allow trading for bitcoin. It’s also going to offer digital currencies to some clients.

This is a major step forward. Google Susquehanna. It’s not a small outfit. It’s going to start trading bitcoin futures, then Ethereum, and bitcoin cash, and this is what it said, “We believe that this technology and this asset class is going to change some facet of financial services, and we think it’s going to exist forever.”

Friends, this is not me talking my book, or this is not some interested party. Susquehanna makes billions of dollars in fees per year. They don’t need the cryptocurrency market. But the fact that it sees this and is positioning itself to get involved tells me, absolutely tells me, that we are in the right market, and that regardless of the volatility we are seeing, our job here is simple. Sit back, relax, put on the blinkers, go play with the kids, the grandkids, the nieces, the nephews. Forget about this day-to-day activity, because it is not going to change the long-term trajectory of this market—which is significantly higher.

Mike Novogratz just gave an interview recently, I believe June 5 or June 10. Excellent interview, and they were asking him point blank, “Is this over? Was that the boom that we saw in 2017?” And he said, “That was the retail boom that we saw in 2017.” He said, “We have yet to see the institutional boom.” He actually called it the “institutional FOMO boom.” And he says, “That boom will take this market to $20 trillion.”

This is what I’ve been saying all along: We have to be patient. As much action as we’ve seen in the cryptocurrency market, there is still so much more to come. Now I know that’s difficult. Me personally, like many of you, from the peak, I’m down millions of dollars, I mean millions and millions and millions and millions of dollars. Could’ve bought a couple of beach homes in Malibu… A lot of money.

But why doesn’t it bother me? It doesn’t bother me because I’ve seen this movie before. I’ve seen this movie before and I know if I’m patient and allow this to play out, allow the CFTC and the other regulatory bodies to create a framework that institutions can use to come into this market, that I’ll make over $100 million from cryptocurrency. That payday is going to be different for everybody watching right now. Some of you have less invested, some of you have more invested, some of you will make more than me when this whole market goes up. Some of you will make a little less.

The bottom line is that the opportunity here for transformational wealth has not gone away. It’s still here, and that’s the key thing that you need to key in on. Is the opportunity for transformational wealth, generational wealth still here? The answer is absolutely yes. Absolutely yes, there is no question that the opportunity is still here. Again, I haven’t just sat behind my keyboard hoping and praying and relying on that. I’ve gone out. I’ve traveled all over the place, talked to so many different people to find out what’s going on, and there is just so much money marshaling on the sidelines, getting ready to come into this market.

We can see it with Susquehanna. We can see it with Goldman Sachs creating its desk. We can see it with Coinbase becoming a regulated broker dealer. We can see it with VanEck. They’ve just put in new filings for a bitcoin ETF. And Thomson Reuters is now creating indexes to track 100 crypto funds. The pieces are starting to come together, but just like in 1990 to 1991, just like in ’94 to ’95, we have no control over when the market wakes up to this. Our job is not to let the tail wag the dog, and the tail wagging the dog means making decisions based on price action.

We’ve got to make decisions based on the pace of innovation of the technology, and the pace of institutional adoption. Institutional adoption is predicated upon a couple of things: having a regulatory framework where the fund manager is not going to get in trouble by buying the asset, which is happening right now, and then having a custody solution, where the fund manager doesn’t have to worry about holding the actual underlying asset—where somebody else can hold it.

Now, I’ve said that by the end of the year, that will be in place. Coinbase is launching its own custody solution, and again, in that Bloomberg interview that Novogratz did, he said he believes there will be some type of consortium of custodians, of Wall Street custodians, that will launch a project later this year. So everything we need to propel higher is in place, but it takes time. Institutions don’t move quickly. It takes time, but that framework is being built.

The best way I can think of it is if we bought land next to a highway. And if we knew a feed of highway was going to come across that land and make all that land valuable, but the land was just staying depressed in price, what would we do? Well, we’d take a look and ask, “Have all the permits been filed? Is the constitution crew there? Do they have the correct financing in place?” And we’d say, “Yeah, okay, all that stuff is happening.” So then we’d just be waiting for them to break ground.

It’s the same process looking at the cryptocurrency markets. Everything that we need to have happen is happening. But in the interim, the market is going to be susceptible to headline risk. Sentiment is very low. People are very scared. A lot of people came into this asset class without really knowing what they were getting into, and now they’re getting hurt. You’re going to see this classic case of selling at the bottom and buying at the top, and they’ll do that all through this cycle.

This is going to be a multiyear uptrend that we’re going to see in cryptocurrency, and repeatedly what you will see people do is sell at the bottom and buy at the top; sell at the bottom and buy at the top. I saw people do that all through the ’80s and ’90s when I was involved in managing money. They would sell at the bottom and buy at the top; sell at the bottom and buy at the top.

I don’t know why people are geared that way, but many people are. So if you have any questions, comments, or concerns, please email them to me. I do want to say that I think I have the very best subscribers in this industry. Recently, I mentioned that I was getting some hate mail, and the outpouring of love—I can’t call it anything but love and care and concern—moved me. It moved me tremendously and I’m just super grateful to be here and have this opportunity to serve you in the best way that I can.

ZenCash
I’m extremely grateful for my members. You’re an amazing group of people, and I really want to thank you for that outpouring of love. I can’t call it anything else because that’s what it was, and I absolutely appreciate it.

Now, I want to talk to you a little bit about ZenCash. I’ve received some really great emails about ZenCash; it’s definitely not hate mail, but some questions concerning whether I was too hasty in selling and why I didn’t give it more of a chance.

So I want to address that very quickly. It broke my heart to put out that sell recommendation on ZenCash, but let me tell you why I did so. What attracted me to ZenCash was it was a project that was going to be—and still might be—an end-to-end privacy solution. So it wasn’t just a privacy coin, but also something where people could publish documents and communicate with other people; it would be a publishing platform that would provide complete secrecy and security. And in places where you have totalitarian regimes, it’s not an exaggeration to say that your life depends on the security of that system.

Now, I think that we “miswrote” the sell alert. I understand that coins weren’t created out of thin air. I get that. They weren’t double-mining. They were double-spending, but they weren’t double-mining. I get that. The reason why I sold it is that a privacy ecosystem has to be beyond a government’s ability to co-opt. A government can’t marshal enough forces to take over a coin if you have a privacy coin. The cost of attacking the ZenCash network was so low—something like $30,000 an hour—that it just completely made the whole idea of its primary focus, which is privacy—it completely invalidated that in my eyes.

If you can subvert a privacy platform with just $30,000, that means you can take complete control of it and basically take it offline. You can just continue to print blocks that you want and pretty much fill up the blocks with nonsense information—and just destroy the whole network really for just pennies. For a state actor, that’s just nothing. It’s no amount of money.

Now, maybe they’ll fix that problem, but this is a problem that should never have come to light to begin with. It should have been fixed. You can’t tell me that you’re going to build a privacy platform and then your platform can be attacked for $30,000. That’s crazy. Again, I like these guys. I like Rob Viglione. I like Jane Lippencott. I like Rolf Versluis. They’re wonderful people. And I’m sure I’m probably not on their Christmas list, so this isn’t personal.

I’ve always told you people ask me, “When do you make a decision to sell?” And I’ve always said, so long as the underlying fundamental case for the idea remains intact, I don’t sell—because we’re so early in this cycle. But when the underlying basis of the idea gets attacked (i.e., in this case, a privacy coin, which should be beyond attack from anyone… especially state operators), and when that underlying fundamental reason to own the coin is compromised, I can’t own the coin. It’s as simple as that.

So maybe they’ll fix that problem, but this is 2018. That problem should’ve been fixed already. They should’ve figured out a way around this. They should’ve game-planned that. They should’ve sat down, done the math, and said, “Whoa, we’ve got a huge problem here. Our entire network can get co-opted for just $30,000. We’ve got to fix this.” But it wasn’t fixed, and the fix that they have now is merely a Band-Aid. Waiting for 100 confirmations before they’ll cash anybody out on an exchange is a Band-Aid. It’s just not a good solution.

So that’s why I decided to sell it… Again, I’ll really only sell things for one of two reasons. It’s either, One: We’ve hit a price target, an internally generated price or valuation target… or Two: The fundamental premise for owning the coin is compromised in some way, whether it’s a security concern or a concern with one of the insiders. Those are really the only two reasons why I will get rid of a coin before the market reaches a certain size.

I hope that answers your question. I know that some of you have decided to stay with the project. Again, I like the people on the project very much. They’re very credible; they’re good folks. They’ve got great background, but I think I’ve explained why I decided to get rid of it.

Tomorrow Night Event
What else? Okay, I think that’s it. There is one last thing I do want to let you know about. Earlier this year, I attended a conference in Miami and I met a guy… or maybe this was the second time I had met him. I met him briefly before over lunch once, but I didn’t really get a chance to chat with him. So I met him in Miami, and he gave a presentation that was incredibly impressive. This guy ran the derivatives desk for a major Wall Street firm. I don’t know if I’m allowed to tell you the name of the firm, so I won’t; but he did an amazing job there, and what he did was process trades for whales.

A whale is just a huge trader or huge investor in the stock market. He created a system for being able to track these guys in the marketplace, even without knowing who they were or why they were buying; he created this methodology for tracking these whales. For the last six months, I’ve been privy to some of the data that he’s been generating, and it’s just been wildly impressive.

So he’s having a special event tomorrow night on Thursday, June 14 at 8 p.m. ET. You should absolutely check it out. He is a very, very bright guy, but he’s also incredibly down to earth. I don’t give my endorsement lightly; I don’t get in here and talk to you about other products or newsletters very often… But this is a guy who you should definitely check out. Once again, that’s going on tomorrow night on Thursday, June 14 at 8 p.m. ET. You can click this link to sign up for it and check it out.

Okay, friends, that is enough out of me. Again, I will say: Take a deep breath. Let’s ride that out. Everything that we need to have happen is happening. It’s certainly happening. I wanted it to happen six months ago, but at least it’s happening. It’s taking place. All of the new regulatory frameworks—the roads—are all being built to bring that institutional capital in play… and institutions are taking those steps to marshal their capital and bring it into the cryptocurrency market.

Okay, friends, that is enough out of me. Again, I will catch up with you in the next video, and I want you to always remember: Let the Game Come to You!