Skip to content
Analysis & Learning

How to Invest in Bitcoin

December 4, 2023
Bitcoin 6m candlestick chart
Bitcoin / US Dollar (BTCUSD) 6-month chart

I am not planning to recommend bitcoin again because I have done that enough with recent alerts. The chart is pregnant with possibilities. If all the trading over the last three years (15 x 3m candlesticks) is forming a consolidation, there could be fireworks ahead.

If all the trading since 2017 (24 x 3m candlesticks) is part of an even larger upward-sloping area of consolidation, it gets more exciting still. A chartist target based on 2017 to 2023 being a mid-term consolidation comes out at over $600,000.

I agree that this is about as fanciful as reading the tea leaves. Still, the simple picture is of a price which, unpegged by fundamentals and driven purely by speculative flows of money in a world awash with cash, could go massively higher.

Ether also looks good but bitcoin looks better.

If bitcoin is going to soar into infinity and beyond are there any obvious shares which might benefit? There is one which I have alerted on before. The last time I featured the Coinbase chart, the price was $84. It has been volatile but around a rising trend.

Coinbase Global (COIN) 3-month candlestick chart
Coinbase Global (COIN) 3-month chart

The case for buying shares in Coinbase is very simple. There should be a relationship between the price of bitcoin and the business going through Coinbase and the profits the company is making. Huge rise in bitcoin = huge rise in Coinbase. Over the last year, the price of bitcoin has roughly trebled. Over the same period, the price of Coinbase almost quintupled.

This may not sound very scientific but it saves a great deal of probably superfluous analysis.

Coinbase has big plans

Let me start with the provocative statement. On chain is the new online. The internet was and is a game-changing technology that redefined our modes of communication, business and social interaction. It broke down barriers, democratized access to information and made knowledge universally accessible.

Blockchain and crypto are doing the same thing today with a decentralization of the web and the introduction of a new building block ownership. Instead of just reading and writing on the traditional internet on chain, you can now read write and own. Onchain is about digital assets, broader access to financial services and even changes how we think about identity governance, artwork and nonfinancial services.

Crypto leverages

Crypto creates a level playing field where everyone, irrespective of their socioeconomic status or geographic location has access to more robust and transparent systems. Crypto creates a world with fewer middlemen, lower fees, faster transaction speeds and greater protection and control over one’s digital assets and identity.

It is for all of these reasons that we believe that Crypto is the greatest tool in increasing global economic freedom. We also think that on-chain will be as essential and impactful as the Internet is today. If we look back to the early years of the Internet, the companies that ignored the noise and built for the future of the Internet now stand as tech giants.

The onchain companies of today will be the tech giants of tomorrow. Coinbase stands at the forefront of this technology and continues to build a responsible, compliant, trusted, financially strong, and innovative business that is building those linchpins products.

Brian Armstrong, Co-Founder and CEO Coinbase Global, Inc
Third Quarter 2023 Earnings Call, November 2, 2023

Sounds exciting, but I must confess that were you to ask me what he is talking about, I would have to mumble into my hot chocolate.

International expansion proceeds apace to justify that ‘Global’ in the name.

This continues to be a year of international progress for Coinbase, starting with international expansion here. In 2023, we officially launched three key go-deep markets. Brazil, Singapore and this quarter in Canada.

Country launches are a significant investment for Coinbase. When we launch in a country, we hire local leadership, we work with local regulators and we establish new payment rails to enable seamless fiat crypto transfers. In Q3, we also obtained key licenses or registrations in Singapore and Spain and continue to pursue and obtain licenses and registrations where it’s clear that we need them to serve our customers.

Brian Armstrong, Co-Founder and CEO Coinbase Global, Inc
Third Quarter 2023 Earnings Call, November 2, 2023

The group makes no secret that it is awaiting the next crypto bull market.

Coinbase is financially healthy with our third consecutive quarter of positive adjusted EBITDA. Meanwhile, we have the most trusted brand and the easiest to use products and continue to build innovative key technologies that expand the utility of crypto and best position Coinbase to take advantage of the next bull market. We continue to do the work of running a trusted, secure and compliant crypto platform, and this is our competitive advantage.

Brian Armstrong, Co-Founder and CEO Coinbase Global, Inc
Third Quarter 2023 Earnings Call, November 2, 2023

Strategy – Buy Coinbase and Pray

Bitcoin and Coinbase are strange investments in that they are speculations on mysterious, uncharted behaviour by instruments that hardly anybody understands. The main argument for buying them is that they have proved incredibly exciting in the past, especially bitcoin, and may do something similar in the future.

The first lesson I learned in economics at Oxford is that if you plot price on the vertical axis, the demand curve slopes down, and the supply curve slopes up. Where they cross is where supply matches demand.

Bitcoin does not have a supply curve, so the price can rise forever without stimulating additional supply. The entire impact of rising demand falls on price. Gold is superficially similar, but if the gold price rises, gold comes out of the woodworks all over the world and marginal mines are brought into production. None of these effects can happen with bitcoin. It is all about the price, which makes it an entirely novel type of investment which has already taken us deep into uncharted waters.

It is also weird because you can’t feel the weight of a bitcoin or bite it. People find it hard to get their heads around it. Still, it is part of this strange virtual world we are heading into – a world populated by Avatars, controlled by blockchains and where silent cars have built-in noise to alert pedestrians and get grumpy if you drive too fast and burn too much energy.

I am already trying to imagine cities without cars so green they look like forests from the air. Elon Musk, whose imagination soars so much higher than mine, has probably already pencilled in a provisional date for the first football World Cup on Mars.

Share Recommendations

Coinbase. COIN. Buy @ $139

Further reading

More >
Subscribers Only
Investment Alerts

Buy Signal for Another of America’s Iconic MegaCaps

July 2, 2024
Subscribers Only
Investment Alerts

Arm Holdings Has That Trillion-Dollar Look

June 30, 2024
Subscribers Only
Investment Alerts

A DIY Portfolio To Beat SOXX – 12 Semiconductor Superstars

June 20, 2024
Subscribers Only
Investment Alerts

An AI Stock with Huge Ambitions

June 17, 2024