Unpacking the Latest Crypto Scare

  • Is bitcoin’s “potentially volatile upcoming event” cause for concern?
  • Small-business owners get sudden jitters
  • Wait till you see what this chart says about the stock market for the rest of October
  • Jail time for a health coach? Florida woman fights the bureaucracy
  • Gun rights for pot smokers? Not at the NRA…

The mainstream still has it in for cryptocurrencies.

Check out the lead to a CNBC story yesterday: “Bitcoin staged a rally over the weekend to hit a one-month high despite experts warning of a potentially volatile upcoming event for the cryptocurrency.”


Imagine a CNBC story that said, “Stocks staged a rally today to hit an all-time high despite experts warning of reckless Federal Reserve policy, gridlock in Congress and banks that are still too big to fail.”

Said no mainstream financial news source ever. Even though those risks are all too real.

Anyway, bitcoin is indeed its strongest since early September — $4,807 as we write.

But what about that “potentially volatile upcoming event”? Shall we cue the scary music?

Well, bitcoin indeed faces some choppy action in the weeks to come… but our resident cryptocurrency millionaire James Altucher says that doesn’t mean stop buying.

Alarmists have been predicting “the sky is falling” on bitcoin despite its 47% rally since its September slump. James emphasizes the evolution of bitcoin — not its demise — as bitcoin miners (aka extreme computer nerds) thrash out some weighty questions in the next month.

“Bitcoins, like other cryptocurrencies, rely on a decentralized record called the blockchain,” he reminds us. “Transactions are assembled into blocks and added to the blockchain by miners who receive a reward for their work.

“Although originally bitcoin mining was possible for users of standard computers, in recent years, bitcoin mining has become a technological arms race dominated by a few large organizations running specialized computers.”

No lie: Estimates vary, but as we said in August, bitcoin mining in 2014 consumed as much electricity as the country of Ireland.

The debate among miners might lead the bitcoin blockchain to a “fork” where it will split in two.

“The new strand of the blockchain will consist of large digital blocks able to record and make transactions faster,” says James; “the few with massive computers will have an unquestionable advantage over small-time bitcoin miners.

“Sounds like scary stuff for fans of crypto who’ve already piled into bitcoin. The question is which strand of bitcoin will be standing when the dust settles?

“At this point, it’s unclear whether both versions of bitcoin will be able to coexist or one will die out entirely,” says James. “However, investors who already own bitcoin or buy bitcoin before the fork will own both versions of bitcoin.”

Forget the mainstream crepe-hanging: Bitcoin already experienced one fork back on Aug. 1. Did the crypto universe collapse into itself as a result? No…

bitcoin chart

James’ takeaway: “Long-term investors can take advantage of potential price volatility to invest in bitcoin in advance of the bitcoin fork. I remain bullish on the long-term potential of cryptocurrency and continue to advise my readers to buy bitcoin.”

[Ed. note: After the wildly successful release of his cryptocurrency primer, James is taking his crypto efforts to the next level. Next week, he’ll show readers like you how to use cryptocurrencies to generate 100,000% returns.

No, that’s not a typo. He’s talking about real strategies to make 1,000 times your money — using only a handful of cryptocurrencies.

You won’t want to miss his special FREE webinar next week. Here’s where you can sign up.]

The major U.S. stock indexes are stagnant as we write, but still near all-time highs.

If there’s action coming today, it’s likely to be in the currency markets. The president of Spain’s Catalonia region is about to address his parliament. By the time you read this, he might have declared independence. But for the moment, the euro is rising against the dollar, currently $1.18 on the nose.

Gold started climbing last night the moment trading opened in Hong Kong. At last check, the bid is up to $1,293. That’s roughly a $30 jump from Friday’s lows.

Small-business sentiment has taken a gloomy turn as summer turns to fall, according to the latest Optimism Index from the National Federation of Independent Business.

The September number rings in this morning at 103 — the lowest level all year and a meaningful decline from August’s 105.3.

The big driver is a drop in sales expectations — nationwide. “The temptation is to blame the decline on the hurricanes in Texas and Florida, but that is not consistent with our data,” says NFIB President Juanita Duggan. “Small-business owners across the country were measurably less enthusiastic last month.”

Indeed, sentiment is likely worse than the numbers indicate, given that business owners in Texas and Florida were too busy cleaning up to bother responding to the NFIB’s survey.

“How much higher can this market go?” asks our Jonas Elmerraji.

“I just ran the stats for October. It could be a very good month for the stock market,” he says — despite all those worries we itemized above. (Reminder: Jonas’ research finds that the S&P 500 spends half of its trading sessions at or within 5% of all-time highs.)

“A month ago,” he says, “the talking heads on CNBC were forecasting a bad month.

“But we reached a very different conclusion. As it turns out, our proprietary indicator did an uncanny job of spotting the major turning points in September. Our Kinetic indicator signaled a tail wind for stocks early in the month, followed by a correction and a small rebound. Sure enough, that’s basically exactly what ended up happening — almost to the day.

“For October, though, the story is very different.”

kinetic composite chart

“The Kinetic Composite chart above is based on 20 years of price action,” says Jonas.

“The key on the chart above is the turning points — when it’s trending higher, it means that the S&P 500 has a tail wind for stock prices. And as you can see, the predominant trend for the S&P in October is up!

“There are some hiccups along the way, sure. But it’s hard to miss the tail wind that’s being forecast by our indicator from Oct. 9 through the end of the month.”

The window opened yesterday — and a short time ago Jonas’ proprietary trading platform served up a new trade. Access here.

Bureaucrats gone wild, dietary advice edition: Heather Kokesch Del Castillo is going to court in hopes of staying in business and avoiding jail time.

When she lived in California in 2014, Kokesch Del Castillo founded a successful business as a health coach. Then her husband was transferred to Florida and she hung out her shingle there — until last May.

That’s when the Florida Department of Health delivered a nastygram ordering her to stop offering dietary advice, complete with a fine of $754. The state accuses her of being an “unlicensed dietitian” and threatens her with fines and up to a year in jail if she persists.

Heather Kokesch

“Unlicensed dietitian” and menace to society Heather Kokesch Del Castillo [Institute for Justice photo]

The good folks at the Institute for Justice have taken up her cause — pointing out that if she put her advice in a book, no one would have a problem with it. But because she counsels individuals, Florida says she must become a registered dietitian — complete with bachelor’s degree, 900 hours of supervised practice and a boatload of fees.

If you’re a longtime reader and this case sounds familiar, it echoes the case of Steve Cooksey — the Type 2 diabetic who got off insulin and medication by following a low-carb paleo diet. His Diabetes Warrior website got him in trouble with North Carolina regulators way back in 2012; it took three years before he was vindicated, also with the help of the Institute for Justice.

Kokesch Del Castillo’s case, by the way, came to the State of Florida’s attention courtesy of a licensed dietitian who didn’t care for the competition. Gotta love America’s snitch culture, huh?

On the topic of the cost of living, a reader writes: “Dave, just wanted to add that in 1974, my mother’s doctor cost $2.50 for an office call and $3.50 for a house call.

“Now it’s about $60 for an office call and nobody does house calls anymore.

“Surely there is some think tank somewhere that could make an independent evaluation of real inflation, and household income (omitting millionaires from the calculation) versus actual cost. My favorite soda has gone up from $1.25 to $2.29 (for 2 liters) just in the last year, and a loaf of French bread from $1.59 to $1.99.

“Thanks for keeping us up to date. As always, I enjoy The 5.”

The 5: We do keep tabs on the “real world” inflation rate as calculated by John Williams at Shadow Government Statistics. In fact, we’ll probably mention it when the “official” numbers come out on Friday!

After a Wisconsin gun dealer wrote in to talk about how federal background checks work, we heard how your experience can vary greatly from state to state…

“As one of the relatively few concealed handgun carriers in the state of California (who isn’t a cop), I can tell you that the background check and interview process carried with it a number of searching questions about drug use. Apparently even medical pot use under federal law makes it illegal to carry a gun anywhere in the country.

“I don’t use any of these drugs, but my understanding is that every single one of the mass shootings over the last number of decades involved drug use by the shooters. In most cases it was prescribed drugs for depression or some similar affliction, including the last one in Las Vegas.

“You have mentioned in your newsletters numerous times over the years the tendency of the general population to give away their rights under pressure tactics at the heat of the moment. It has always seemed true to me that any time you really want to handle anything, you need to discover what the real problem is before you can do anything about it.

“We never used to have all these shootings decades ago (when my dad used to walk to school in rural Nebraska plinking cans with his .22 revolver) and there were plenty of guns. There weren’t wall-to-wall commercials on TV for drugs, though.”

The 5: Certainly with school shooters, there’s a high prevalence of psychiatric drugs, especially the SSRI class of drugs like Paxil and Zoloft.

The Citizens Commission on Human Rights has documented “at least 36 school shootings and/or school-related acts of violence [that] have been committed by those taking or withdrawing from psychiatric drugs, resulting in 172 wounded and 80 killed (in other school shootings, information about their drug use was never made public — neither confirming or refuting if they were under the influence of prescribed drugs).

“The most important fact about this list is that these are only cases where the information about their psychiatric drug use was made public.”

As long as the reader brought up the pot angle, and because we have an interest in penny pot stocks around here, a quick thought…

Sometime in the next couple of years, “conservative” Americans are going to have to reconcile their professed support for the Second Amendment with their law-and-order attitude toward weed.

When you buy a firearm from a dealer and fill out your Form 4473, there’s a question about “unlawful” drug use, including a warning in bold font: “The use or possession of marijuana remains unlawful under federal law regardless of whether it has been legalized or decriminalized for medicinal or recreational purposes in the state where you reside.”

For this reason, the National Rifle Association never spoke up in defense of Philando Castile — the concealed-carry permit holder who was shot and killed during a traffic stop last year by a panicky Minneapolis cop, the horrifying aftermath recorded on video by his girlfriend.

It should have been a textbook case for the NRA to take to the mat; Castile identified himself as a permit holder to the officer. But the NRA maintained a deafening silence because it turned out Castile also had a little dope on him. A few weeks after the cop was acquitted of manslaughter, NRA spokesmodel Dana Loesch admitted as much when confronted on Twitter…

Dana Loesch tweet

Evidently the NRA believes that if you smoke dope… even where it’s legal under state law… even if you do so to cope with, say, migraines or Crohn’s disease… you forfeit your Second Amendment rights.

It’s inevitable the NRA will alter this stance as public opinion on pot continues to shift (and penny pot stocks become all the rage). But the fact that the NRA maintains this stance in the first place almost beggars belief…

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. Said a recent mainstream headline: “Crypto Boom: 15 New Hedge Funds Want in on 84,000% Returns.”

Those kinds of returns seem unreal, right? Or, at least, the sort of thing limited to deep-pocketed hedge fund types, right?

Not so, says hedge fund (and cryptocurrency) legend James Altucher.

He says it’s possible to pull in 100,000% returns — and he’s keen to show you how during a live special event next week.

As with James’ other events, he typically charges $525 for access. But because he’s now a part of the Agora Financial family, we’ve made it possible for you to look in FREE. Just sign up for access at this link.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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