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Should you buy Bitcoin when it costs $67,000?
If you look at the major indexes, you will see that the stock market is in record territory. This bullish sentiment has also crept into the more speculative realm of digital assets. The cryptocurrency market is currently valued at $2.5 trillion, close to its all-time high.
Call it a bubble if you want. But the monstrous recent performance of digital tokens, Bitcoin (CRYPTO: BTC) in particular cannot be ignored. The world’s most valuable cryptocurrency has soared 308% since the start of 2023 (as of March 21). And although it currently sits 9% below its all-time high of $73,750, set on March 14, it has climbed 61% this year alone.
As the months and years go by, fewer and fewer investors have heard of Bitcoin. But there are still many investors who do not own it.
Should you buy this top cryptocurrency when it costs $67,000? Let’s explore Bitcoin and its prospects even at its highest highs.
The perfect setup
Bitcoin’s recent price action is a microcosm of its long-term volatility. Huge price swings, at least relative to stocks, are normal. But over long periods of time, this digital asset has certainly exploded.
This year promises to be one of the most favorable contexts for Bitcoin to continue to increase in value. There are three key factors that investors should be aware of. A valid argument can be made: anticipation of these events has already helped propel Bitcoin.
The first development was the much-anticipated approval of cash exchange-traded funds. These investment vehicles have not only legitimized Bitcoin as a financial asset in the eyes of regulators and asset managers, but there is now a transparent way for individuals and institutions to gain exposure.
Then there is the upcoming halving, an event that will reduce the supply of new Bitcoins entering the market. Historically, the digital asset has seen impressive growth in the 12 to 18 months following its halving, with demand outpacing the production of new coins. This could be the case again.
Finally, there is a lot of talk about the Federal Reserve cutting interest rates several times in 2024. It all depends on the trends that play out with inflation. But lower rates and a more accommodative central bank have no direct impact on asset prices. However, they encourage savers and investors to seek riskier securities to obtain adequate returns. And this could lead to more capital being invested in Bitcoin.
The Bitcoin Value Proposition
It is important to ask why Bitcoin has value to people. I think it’s pretty simple.
The story continues
For the first time in digital form, there is an asset with a fixed supply cap that anyone in the world can buy and hold (assuming they have funds to invest and access to the internet) . In a democracy like the United States, someone is accustomed to the developed payments and financial infrastructure that traditional banks offer. But someone operating in a system of weak payments and financial infrastructure under a totalitarian regime like Venezuela might find value in an open, decentralized, censorship-resistant asset.
And like any other currency, Bitcoin is valued by its users. As long as there is demand for Bitcoin, it will remain a store of value.
Nonetheless, critics might say that Bitcoin is worthless, as they point out that it is just fake internet money. This argument might make sense at first glance. Yet there is a reason why Bitcoin has continued to rebound from its lows to new highs, despite all the geopolitical, macroeconomic, and industry-specific events that have occurred over the past 15 years. It has proven to be resilient and people around the world have shown increased interest in wanting to own it.
The best time to buy Bitcoin was in 2009. The second best time is currently, when it is at $67,000. There is still plenty of upside potential over the next decade and beyond.
Should you invest $1,000 in Bitcoin right now?
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Neil Patel and its clients have no position in any of the stocks mentioned. The Motley Fool posts and recommends Bitcoin. The Mad Motley has a disclosure policy.
Should you buy Bitcoin when it costs $67,000? was originally published by The Motley Fool