A $1.4 Quadrillion Transformation

The Future Is “Tokenized”

The year 2025 will be the year of “tokenization,” declares Paradigm’s crypto and AI authority James Altucher.

James was one of 11 Paradigm editors who gathered near our Baltimore headquarters last Thursday for a meeting of the minds. They unveiled their top forecasts for 2025 — the trends, the opportunities and especially the surprises.

What follows are some highlights from this extended bull session — and we do mean “some.”

In several cases, the editors purposely submitted ideas still in their formative stages — eager for their colleagues to poke holes in their arguments so they can refine those ideas and make them “ready for prime time” in the form of an investment thesis to present to paid subscribers. So you won’t hear about those today.

In a few cases, though, the ideas presented were already fully vetted — with compelling supporting evidence even when they seem over-the-top outrageous.

And so it goes with James’ tokenization forecast…

We’ll get to what “tokenization” is momentarily. First, some background…

In 2017, James declared there was $200 trillion of currency in the world — and if Bitcoin could capture just 1% of that share, it would have a $2 trillion market cap and be worth $100,000.

Lo and behold, that’s where we are here in December 2024.

But in retrospect, James says he was missing the full picture. Yes, there’s $200 trillion of currency in the world — but there’s $1.4 quadrillion in financial assets.

And any financial asset can be turned into a cryptocurrency. That’s tokenization.

What’s the benefit, you ask?

Think about this, says James: “Every time you use your credit card, you're basically saying, ‘I agree to give some random companies 2-3% of my money just to spend my own money.’

“If you make $100,000 a year, you're instantly giving away $2,000–3,000 just for the privilege of buying stuff. It's even worse if you're a small-business owner — those fees might be eating up 15–20% of your actual profits.”

Oh, and in the 48 hours it frequently takes to process each transaction, all those middlemen are earning interest on your money.

Tokenization can change all that: Any financial asset can be a cryptocurrency, traded on an exchange 24/7 and at a fraction of the fees. The time isn’t that far off, says James, when instead of jumping through the hoops of taking out a home-equity loan, you could tokenize your house and lend 10% of it to anyone who’ll agree to your terms.

It sounds far out — but with a more crypto-friendly administration about to take over the executive branch, it’s coming faster than you think.

James is especially encouraged by Donald Trump’s appointment of a crypto and AI “czar” — David Sacks. Sacks helped revolutionize payments a generation ago as chief operating officer of PayPal. He was right there in the “PayPal mafia” along with Peter Thiel and Elon Musk. And he’s in a position to effect an even more radical transformation now.

Crypto is “not JUST about Bitcoin,” says James — “it's about the entire financial system being rebuilt from scratch.

“Remember when we all thought the internet was about email? This is like that.

“We're all focused on crypto prices while the actual infrastructure of money is being reinvented.”

It’s early days and James is still researching the best-in-class players who will put the word “tokenization” on everyone’s lips in 2025.

In the meantime, here’s an idea of James’ that’s ready for you to seize on right now. It comes on the heels of a major announcement from Nvidia — and James has discovered a way to bank 10X, perhaps in as little as 12 months.

For details, please review this urgent message from our director of customer success.

Revealed: The Biggest Market Story of 2025

“What if I told you that I could tell you the biggest news story of next year?” says trading pro Enrique Abeyta, the newest member of the Paradigm team. “I know exactly what it’s going to be.”

Hold onto your hat: Enrique says Nvidia Corp. will shed $1 trillion of its market cap sometime in 2025 — or at the outside, the first half of 2026.

Given NVDA’s current market cap of $3.21 trillion, we’re looking at a 31% drop. And that drop could happen in a matter of days — most likely on an earnings disappointment.

The drop will be a shock for anyone who’s not ready — which is to say nearly everyone. But Enrique says it’s baked into the cake: There’s 150 years of history and data behind it, and a dozen market cycles — some of which have happened within our lifetimes.

The best analogue he can draw on is Amazon during the dot-com bust from 2000–2002: AMZN’s share price lost a staggering 90% before staging a comeback and becoming a dominant force.

Nvidia, he says, will do the same. Over time, its present $3.21 trillion market cap will double or maybe even 10X. But before that happens, there will be a drop that catches the CNBC crowd totally off-guard.

Enrique shared an idea with the group about how to hedge this risk. For the moment we’re going to withhold that idea in case he wishes to release it first to some of our paying readership…

As the Bull Market Enters Year Three…

“Some of you might have noticed we’re in a bull market,” quips Paradigm chart hound Greg “Gunner” Guenthner.

And he says you can be forgiven for thinking the atmosphere right now is a little too bullish, maybe even bubbly, given the enthusiasm for AI and memecoins.

But here’s the reality: The current cyclical bull market began in October 2022 — the S&P 500’s bottom after a bear-market drop of over 20%.

Since 1950, the typical bull market has run 5½ years, generating an average gain of 114%.

So by that standard, we’re not even halfway through, and more gains are yet to be had: We’re early in year three, and the gain so far is about 70%.

That said, the third year of a bull market tends to be a snooze compared with what came before: “We’re probably not going to have the big push higher that we did in 2024,” says Gunner.

What’s more, we’re overdue for a 10% pullback — the last one came more than a year ago. “Be on the lookout, even in the first half of 2025, for the S&P 500 to drop 10%.”

Which means you can’t rest on your laurels in an S&P 500 index fund — especially if your impulse is to hit “sell” as soon as there’s a flurry of bearish mainstream headlines.

You’re going to have to be more selective to achieve outperformance. On that score, Gunner is still keen on Bitcoin, seeing the potential to hit $279,000 by this time next year. (Just beware that it’s far more volatile than an S&P index fund!)

Something else to consider is the enormous outperformance of “soft” commodities like coffee and cocoa. Coffee futures recently eclipsed their all-time high set in 1977. “No wonder I haven’t been able to get Dunkin’ coffee on sale at Costco!” he laments.

The simplest way for retail investors to play the trend is the Invesco DB Agriculture Fund (DBA).

“DBA presents a picture-perfect uptrend off the 2022 bottom and the closest thing to a pure play on coffee and cocoa,” says Gunner.

“If today’s agriculture rallies mimic the 1970s bull runs, coffee is just beginning to percolate,” he concludes, “and cocoa will likely see another 400%-plus markup.”

[Dave’s disclosure: I built a small position in DBA throughout 2021 and I might add to it here.]

The most interesting market story as a new week begins is in crypto: Bitcoin sailed past $106,000 over the weekend and that gain is holding for the moment.

Elsewhere in the cryptosphere, Ethereum poked past $4,000 this morning — testing its year-to-date peak from mid-March. (Unlike Bitcoin, Ethereum still has a ways to go to equal its giddy late-2021 record near $4,750.)

As for stocks, it’s the Nasdaq leading the major indexes higher — up 0.85% at last check, into record territory at 20,096. The S&P 500 is up 0.4% at 6,074 while the Dow is flat.

Not much action in the commodity complex — gold at $2,654, silver at $30.56 and crude at $70.72.

The National Strategic Computing Reserve

The U.S. government has a Strategic Petroleum Reserve. And Donald Trump is talking up a strategic Bitcoin reserve. How about a strategic reserve of computer power?

That’s the bold forecast of Paradigm’s tech-investing specialist Ray Blanco — a National Strategic Computing Reserve.

It will be an expensive and all-encompassing undertaking — comparable to the Manhattan Project and the moon landing.

Ray says it will aim to ensure the United States is the world leader not only in AI but in the next generation of digital technology — quantum computing.

We won’t get into the weeds of quantum computing today except to say that it’s an enormous leap from anything we’ve seen up until now.

If quantum physics blows your mind — the idea that, say, a particle can be in two places at once — quantum computing is much the same. Rather than bits of 0s and 1s, the building block of quantum computing is qubits that can be 0 and 1 at the same time.

Ray says the guts of a National Strategic Computing Reserve are already in place, thanks to a Biden administration initiative in 2021 that aimed to harness computer power to track the progress of COVID and other viruses.

And with figures like Elon Musk, David Sacks and Marc Andreessen in Trump’s circle, Ray believes it will become a newsmaking force in 2025 comparable to the space program in the 1960s.

Yes, there’s an investment play, and it’s not a tiny unknown thing either; it’s a $28 billion company. But the recommendation will likely go out first to readers of Altucher’s Investment Network, so we’ll hold off naming it here…

Mailbag: Taxing Matters

“Thank you for the inflation tax adjustments detailed in Bullet No. 2 on Friday,” a reader writes.

“I was so impressed, I sent a revised version to my congressperson. He has been a reliable vote for the Nancy Pelosi party since 2001: likely not a reader of your newsletter.”

Dave responds: There’s no reason Democrats couldn’t get behind some of these ideas — especially adjusting the “provisional income” threshold on Social Security and raising the capital gains exemption on a home sale.

But at this stage, it appears that any bipartisan momentum on taxes will probably coalesce around lifting the SALT deduction on state and local taxes.

One wonders, however, how much of an increase will make a difference — even in high-tax “blue” states. For a lot of folks, the standard deduction nowadays is such that it would take a very high SALT cap to make it worth the trouble to start itemizing again…

“The government is a devious lot,” a reader writes on the notion of “Rothifying” 401(k) contributions — also detailed in our tax-themed edition Friday.

“In Canada we have a RRSP (Registered Retirement Savings Plan) similar I believe to the 401(k). You put money in and get a tax break, about which you think, Woo-hoo. The money inside the RRSP grows tax free. When you retire your earned income goes down and you pay less taxes.

“Then when you have to withdraw savings from your RRSP, according to government rules, your earned income goes up and voila you’re paying the same high taxes as when you were working. It’s nothing more than income leveling for the legalized mafia (government). So if this is similar to your system, they won’t change the rules.

“P.S. Don’t ask me about property assessment in Canada, which most inhabitants of this country aren’t aware of.

“I’m not going to say I love The 5. Love is reserved for people but I have to read it every day, no ifs ands or… those buts weren’t intentional but I couldn’t think of any other wording.”

Dave: Yes, we have RMDs, or required minimum distributions, starting at age 73, although that will go up to age 75 come 2033.

The amount you’re required to take out rises each year — which, without judicious tax planning, puts retirees at risk of going into a higher tax bracket and/or paying higher Medicare premiums. So the mafia metaphor is apt…

Best regards,

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets