₿ Why Bitcoin Could Hit $100k in 2024

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What’s on the Menu 🍴

The oven is hot, hot, HOT!

So many delicious opportunities, and so many people left outside of the kitchen.

Here’s what you NEED to know:

• Is There Value In This Hated Sector? 🎓

• Will Bitcoin Break To $100K+ This Year? ₿

• Are You TOO Focused On Dividends? 📉

Today’s newsletter is a 5 minute read.

Is There Value In This Hated Sector? 🎓

We love hunting for value in unloved sectors of the market…

And the education technology (”edtech”) sector is definitely beaten down right now:

Household names like Udemy, Coursera, and Chegg are all down over 40% year-to-date!

Might there be some value in one or more of these stocks?

We think there just might be, but why are they so hated at the moment?

Here are a few of the reasons the market is worried about the future of these companies:

• AI tools like ChatGPT could steal customers

• There’s been a slowdown in revenue growth in the post-covid period

• A softer economy could lead to less corporate training revenue

Some of these concerns are definitely valid.

For example, Chegg (ticker: CHGG) offers study tools for students and these products are now in direct competition with ChatGPT.

CHGG’s revenues have been in decline for two years now, and investors are worried the declines will accelerate.

CHGG is working on its own vertically focused AI models trained on their large datasets of questions & answers, but it’s unclear how successful these will be at stopping the bleeding.

At some point CHGG could decide to license its content to other AI companies as well.

But for now the stock remains under pressure, trading at just 4X next year’s earnings estimates.

Udemy (ticker: UDMY) and Coursera (ticker: COUR) however could be somewhat more immune to ChatGPT disruption since they offer full courses and certificates.

One could argue that these companies could even play a significant role in retraining people who lose their jobs to AI disruption.

Both UDMY and COUR continue to grow revenues at double digit rates, even though growth has slowed down versus last year.

And both have improved profitability lately, generate positive free cash flow, and have net cash on their balance sheets.

Valuations for UDMY and COUR now look quite reasonable based on forward estimates:

If you believe they grow well into the future then today’s prices could prove to be a compelling entry point.

Buying a “falling knife” is always scary, but for long term investors cheaper prices on good companies is a huge benefit!

Will Bitcoin Break To $100K+ This Year? ₿

Alright, let's dive into the state of Bitcoin and why I think we're headed towards the $100k mark this year.

Since January 2023, Bitcoin has been on a wild ride, kicking off a bull market that many didn't see coming. The key trigger was Bitcoin crossing above the 50, 100, and 200-period moving averages.

When these three line up, it’s a clear signal: the bulls are in control.

We also saw a significant boost during the banking crisis, which provided a solid buying opportunity.

One of the most unprecedented events was Bitcoin logging seven consecutive green monthly candles. That’s a rare sight, indicating strong bullish momentum.

Despite some expected pullbacks – about five 20% drops during this bull run – the bulls have consistently defended the $60k support level.

Technical patterns like the inverse head and shoulders on the daily chart have been forming around these support levels, indicating that the bulls are prepping for another push.

Every dip below $60k has been quickly bought up, which shows strong market confidence.

Looking at the bigger picture, the 1.618 Fibonacci extension points to a potential target around $120k. This level aligns with historical market behavior, where Bitcoin often rallies to significant Fibonacci levels during bull markets.

Moreover, Bitcoin’s performance relative to traditional stocks, particularly the Nasdaq, shows that Bitcoin is starting to decouple from the stock market. This decoupling suggests that Bitcoin is maturing as an asset class, attracting a broader range of investors.

Altcoins have been underperforming Bitcoin, which isn’t typical in a bull market. This tells us that the market’s focus is squarely on Bitcoin.

But certain large caps like Solana have shown promise, and selective altcoin investments could still yield substantial returns.

As always, it’s essential to cut through the noise – regulatory drama, political rhetoric, and market speculations.

Aside from all the noise in the media, the price action reveals the true story.

As long as Bitcoin holds above critical support levels, the path to $100k is not just a dream but a plausible scenario.

Keep your eyes on the charts and stay ready for the moves ahead.

For a deeper dive, watch my bitcoin “state of the markets” video here.

Are You TOO Focused On Dividends? 📉

Dividends are payments to shareholders from a corporation to “reward them” for sticking around.

Everyone has grown to love a good dividend. In fact, many finance accounts on social media have created their entire identities around being dividend investors.

I’m sure you’ve heard of “The Dividend Dude’s” of X.

I’d like to bring to the table an argument that focusing TOO much on dividends may have you focused on the wrong thing.

First we start with a few important points about dividend stocks:

1. Dividend stocks CAN be growth stocks, but it’s more likely that these will be more stable companies with less growth overall (and less volatility).

2. If you hold dividend stocks in a taxable account, dividends are taxable events that you can’t control.

So… you may be seeing what I am getting at already.

Any good investment advisor is going to quickly move to making sure that your investment strategy aligns with your goals and tax plan.

Dividends very well may be a part of that plan… but, they also may not be ideal for you right now.

As I like to say, “there’s a time and a place for dividends”.

So, if you’re young, have a lot of time to compound, and have a higher risk tolerance, you’ll likely want a portfolio optimized for GROWTH…not dividends.

Growth will lead to higher returns, however, many dividend stocks are like I mentioned before, stable, lower growth companies.

You can see the difference between an ETF that focuses on popular dividend stocks in the S&P 500 (purple) vs. the S&P 500 as a whole (orange).

This is total return, so it includes dividends.

The point really gets driven home with the top holdings of the ETF’s.

Here is the (SDY) S&P 500 Dividend ETF:

There is no top tech company in the top holdings. No real “growth” stocks.

Now we look at the (SPY) S&P 500 ETF:

It’s no wonder it has seen outsized performance. The top holdings are the greatest tech companies in existence. (META and GOOG have only recently announced a plan to pay dividends).

Just another great reason to always look at your ETF holdings and invest based on the ones that fit your risk and needs.

Now, you may be thinking… “but, risk adjusted returns!” You’re right… and the dividend stock ETF does not win here based on the sharpe ratio.

Then, there is the tax part. Qualified dividends have a big benefit of being tax beneficial by qualifying for long-term capital gains rates. What’s not to like here?

Perhaps someone with high income or someone who is trying to CONTROL their income to qualify for certain tax credits may want to watch out for dividends pushing their income higher.

You have no control over when dividends are paid and taxed.

It’s not a “bad” problem to have per se’, but, if your income increased and now you missed out on a huge tax credit, this is more so the issue to watch out for.

Of course, if income is not a concern, there is certainly a benefit to the long-term capital gains treatment. But remember, you’re taxed either way no matter if you take the cash and spend it, or reinvest the dividend.

So, who are dividends for?

People who are trying to live off of their investments could benefit big time from the income that gets paid out to shareholders and the lower volatility of certain dividend stocks.

Someone who has a lower risk tolerance in general, may not love the volatility that comes with a growth focused portfolio. Focusing on equities paying dividends could certainly align.

So, it’s not to say that dividends are bad and shouldn’t be sought out.

The main point is not to be blinded by the dividend and see it as the ONLY and BEST strategy you should be seeking out in your investing portfolio!

Food For Thought 🧠

"Opportunities don't happen, you create them."
- Chris Grosser

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.