Blockchain
Should You Buy Bitcoin While It’s Under $60,000?
Despite an increase of 275% since the beginning of 2023 and 47% since the beginning of this year (as of July 3), Bitcoin (CRYPTO: BTC) has been basically trading sideways since the beginning of March. It seems like the digital asset is having a hard time breaking out and starting to march towards a new record.
And as of the afternoon of July 5, Bitcoin is trading at around $56,500, or about 23% below its high. That’s why investors should add the the most important cryptocurrency in the world in their wallet, when it is less than $60,000.
Focus on the short term
As an asset that is only about 15 years old, the digital currency is still reaching some milestones in its development journey. This January, the Securities and Exchange Commission finally approved the trading of spot Bitcoin exchange-traded funds (ETFs), a monumental moment in the history of the cryptocurrency.
Since its approval, its price has jumped 24%. Money continues to flow into these ETFs. With the increased accessibility and convenience that funds provide, I think it is reasonable to assume that large pools of capital, such as pension funds and sovereign wealth funds, will move some money into Bitcoin over time.
In April, Bitcoin has undergone a halvingwhich cuts the new supply available to miners in half. This event occurs roughly every four years and has usually led to a major bull run for the cryptocurrency in the following 12-18 months. With demand rising for an asset whose inflation rate has just dropped, it makes sense for the price to rise.
And there’s another potential near-term catalyst on the horizon. While inflation remains well above the Federal Reserve’s 2% target, there’s hope that interest rates will start to fall sooner rather than later. When that happens, investors will be incentivized to take on more risk to generate a higher return on their assets, which could lead to more capital flowing into Bitcoin.
Focus on the long term
Stepping back and focusing on the bigger picture, there are other reasons to be optimistic about its potential. For starters, there are a number of companies, particularly To blockwho are working on developing tools and services to help drive Bitcoin adoption. This could mean creating user-friendly physical wallets for blockchain assets or launching new payment mechanisms that use the cryptocurrency.
I also think it’s important to consider how demographic shifts could impact Bitcoin for the better. Gen-Zers, defined as those ages 12 to 27, are more likely to own cryptocurrency than stocks, according to a survey conducted by online insurance retailer Policygenius in October. In a world that’s becoming increasingly digital, it makes sense that people would want to own something like the leading cryptocurrency as a store of value when they might think it’s more useful to them than the traditional financial system.
The story continues
There will only ever be 21 million bitcoins in circulation. With this fixed limit, the digital currency is rarer than gold. And it is portable, divisible, and functional in transactions. It might be easy to believe that it is a superior asset to gold.
The value of all the gold in the world is estimated at $15.9 trillion. As a conservative assumption, let’s say that Bitcoin’s market cap reaches half that level, or about $8 trillion. At that point, each Bitcoin would be worth about $380,000. That implies an impressive gain of nearly six times the current market cap. If it takes a decade to get there, investors are looking at a theoretical annualized gain of 21% in the price of the digital asset.
With Bitcoin trading well below the $60,000 level, I believe investors would be wise to consider buying with the intention of holding the cryptocurrency for the long term.
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Neil Patel and its clients have no positions in any of the securities mentioned. The Motley Fool has positions in and recommends Bitcoin and Block. The Motley Fool has a disclosure policy.
Should You Buy Bitcoin While It’s Under $60,000? was originally published by The Motley Fool