The price of Bitcoin (CRYPTO: BTC) is surging yet again. While it hovers just below the $100,000 mark, many investors are asking themselves the same question: Is there still time to buy? If you’re willing to remain patient, the answer is shockingly clear.
Bitcoin was launched in the early days of 2009, during the depths of the financial crisis. At the time, it had almost no following, with a single Bitcoin trading for just pennies. Today, nearly everyone has heard of the cryptocurrency. Its market cap is north of $1 trillion, and millions of people personally own Bitcoin, either directly or through an exchange-traded fund (ETF). The cryptocurrency has simply been one of the best investments of all time, with a trading price that is now approaching $100,000. It crossed this threshold in recent weeks, but a correction pushed the price under $100,000. While many believe Bitcoin’s best days are behind it, this could be just the beginning.
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To be clear, don’t expect Bitcoin’s historical returns to be replicated in the future. However, there’s reason to believe that there’s still plenty of upside potential for long-term holders.
My No. 1 reason to remain invested in Bitcoin is its attractiveness as a store of value. Unlike most investments that follow the financial prospects of a company or business opportunity, stores of value don’t produce cash flow or dividends. Instead, they simply represent a medium that a critical mass of people agrees is worth something of value, even if that value is mostly social or symbolic. Gold — another popular store of value — has been valued by humans for generations. Its market cap is currently around $18 trillion. Bitcoin’s market cap, meanwhile, remains under $2 trillion.
It will take years, if not decades, for Bitcoin’s reputation to catch up with gold’s. But if it does match gold’s market cap, there would be more than 900% in additional upside. That’s a very fair return, even if it takes a decade or two to get there. Bitcoin has clearly passed the proof of concept stage, and unless something catastrophic happens, it’ll continue to exist for the rest of our lifetimes. The longer it survives, the more faith people will have in it as a store of value, a dynamic that should continue to see its value converge with that of gold.
Related to the store of value thesis, Bitcoin is also a great buy today if you’re worried about economic uncertainty. Whether your concerns relate to geopolitical events, inflation, climatic shifts, or something else, Bitcoin can be a safe haven for your funds. The cryptocurrency is not controlled by any nation state, although they do have some ability to regulate its use. While the number of Bitcoins continues to increase, this inflation rate is set to diminish over time. At some point, zero new Bitcoins will be created — a dream scenario for those looking for inflation-protected assets.
