Bitcoin
3 reasons to buy Bitcoin like there’s no tomorrow
Bitcoin is just getting started and has many more advantages to offer investors.
As attractive as cryptocurrencies may be, they are risky. While the blockchain technology that powers these assets is innovative and has the potential to transform finance as we know it, its role in the future remains ambiguous and almost unclear.
However, there is one cryptocurrency with a proven track record that provides investors with the safest exposure to the best the cryptocurrency market has to offer. Here’s why I’m buying Bitcoin (Bitcoin -0.77%) as if there was no tomorrow.
Image source: Getty Images.
1. The Halving Effect
On April 19, Bitcoin passed its fourth reduce by half. Occurring approximately every four years, halvings form the basis of Bitcoin’s robust monetary policy, which prioritizes preserving scarcity value by halving its inflation. With the fourth halving now behind us, Bitcoin’s inflation rate now stands at just 0.85%. This makes it less inflationary than what many believe to be the superior store of value and hedge against inflation, gold.
In the long term, it is easy to see how continued reductions in the inflation rate will benefit Bitcoin price growth. If demand for the cryptocurrency continues to increase, the decreasing inflation rate will put more pressure on its finite supply of 21 million coins. Add it all up and you have the perfect recipe for price appreciation.
Even in the short term, the halving effect makes Bitcoin a viable investment today. In the years in which the halving occurs, Bitcoin grows on average by 125%. When measured from the start of the year, this would put its price at just over $100,000, meaning there is still generous potential for returns today, even with its price at around $65,000. However, the best that Bitcoin has to offer usually materializes in the year following the halving. Historically, during these years, Bitcoin has increased by more than 400%.
2. Greater institutional interest and clearer role in the financial scenario
For most of Bitcoin’s existence, its rise to the top was driven by retail investors. But now things are about to change. With the approval of spot Bitcoin ETFs, institutional investors with vast capital reserves can easily invest in cryptocurrency. Now that Wall Street’s biggest names have arrived, it will likely put exceptionally more pressure on Bitcoin’s finite supply, something it likely hasn’t seen since its early days.
On a semi-related note, the fact that Bitcoin has been approved for a spot ETF is an indicator of the market’s current perception of it and its role in the financial landscape. For example, let’s consider that Ethereum (CRYPTO:ETH), the second most valuable cryptocurrency, is in the midst of an intense ETF approval debate as regulators try to determine whether it is a security or a commodity. If this conversation is about Ethereum, you can guarantee that all other cryptocurrencies will be questioned in a similar way.
Now, I will be the first to admit that just because the Securities and Exchange Commission (SEC) Thinking that a cryptocurrency is a security does not mean that it is the end of a certain blockchain. Most of these assets are quite decentralized and would continue to operate even if the SEC initiated litigation. Remember that cryptocurrencies are traded internationally and are not subject to the laws of any specific country.
However, markets don’t like the idea of legislative risks. This is why Bitcoin is such a safe investment today. The SEC has already deemed it a commodity and beyond its purview of control. This gives it unique staying power and an additional layer of assurance that it will not be harmed by regulatory scrutiny.
3. In your own class
In the same vein, Bitcoin has generated significant institutional interest and has such a clear designation in the financial landscape due to its key characteristics, which make it unique compared to virtually all other cryptocurrencies.
When you invest in Bitcoin, you are investing in the most decentralized, secure and proven cryptocurrency on the market. There is no single group overseeing its operations. We don’t even know who created it. All we know is that its creator used the pseudonym Satoshi Nakamoto and has since disappeared.
No other cryptocurrency can claim this. Almost all other cryptocurrencies have a known creator and a team of developers who maintain their functionality, which makes them much more likely to fall within the scope of the SEC.
On the other hand, Bitcoin has operated more or less in its original form for the last 15 years, devoid of any central figure or authority. In other words, even if the SEC wanted to take action against Bitcoin, it couldn’t. Who would sue? The creator of Bitcoin is unknown and it runs on the most decentralized network, with thousands of nodes around the world.
Final thoughts
Adding it all up, I dare say that there is never a bad time to invest in Bitcoin. Are there moments better than others? Clear. Investing in the depths of crypto winter should provide better returns than investing at the top. However, the data shows that as long as investors held on long enough, even if they bought at the top, they would still see generous returns over the long term.
As fiat currencies continue to be inflated, institutional interest continues to grow and halvings continue to pass, Bitcoin is poised to continue to exceed expectations and show why it is different from any other asset. Michael Saylor, notable Bitcoin investor and CEO of Microstrategy (which holds about 1% of the total Bitcoin supply), could have said it better: “I will be buying at the top forever.”