Cryptocurrency investors should be used to volatile prices by now. The market for digital coins and tokens rose from $17 billion to $820 billion in 2017, fell back to $100 billion over the next two years, then nearly touched the $3 trillion mark in November 2021. An inflation-inspired dip took the crypto market back below $800 billion six months ago, and now there’s another upswing going on with a total crypto-market value of $1.1 trillion.
There are no guarantees in investing, and especially not in the unpredictable crypto sector. However, I see much more upside than downside to picking up some Bitcoin right about now.
However, Bitcoin remains the leader of the pack. It’s not only the oldest name on the list and the largest in terms of current market value, but also a battle-tested juggernaut that continues to write the rule book for other cryptos to follow.
There will never be more than 21 million Bitcoins in circulation, and 19.4 million of these tokens have already been minted. It’s far from the only crypto that limits inflation by technical means, but the sheer scale of Bitcoin makes it incredibly expensive and nearly impossible to change this policy.
In the best of all possible worlds, Bitcoin eventually will become the default global currency with massive institutional investor holdings and billions of real-world payment transactions every year. In the worst case imaginable, Bitcoin falls to zero in the long run for some reason — better solutions emerge, every government bans cryptocurrencies, the code turns out to have catastrophic security flaws, and so on. Both of these extremes are about equally improbable.
Instead, I expect Bitcoin to work its way through this period of regulatory uncertainty and limited mass-market adoption for a few more years. In the end, many blockchain tokens should emerge as big winners in an increasingly digital global economy — and Bitcoin will probably hold on to its dominant market footprint.
The current crypto winter won’t last forever, and Bitcoin looks like the most robust long-term investment idea in the crypto sector. Other names will follow along, but none of them can match Grandpa Bitcoin’s rock-solid value proposition.
In other words, smaller names can be fun but are completely optional. And when it comes to Bitcoin, make sure you have some in your digital pocket before the next bull run starts.
I see several reasons to take action on cryptocurrency investments right now, and particularly for Bitcoin:
- Inflation hedge: The worldwide inflation crisis is fading out, but nobody wants to experience another one. From consumers and investors to business owners and government agencies, everyone could use a value-stashing asset that could ride out the next 100-year storm in traditional fiat currencies. Bitcoin could serve that purpose in many cases.
- Increasing adoption: A few retailers already support payments in Bitcoin and other popular cryptocurrencies. More are likely to follow in the next couple of years, as the Web3 vision develops. This potential shift toward decentralized systems could disrupt the slower and more bureaucratic systems we’re accustomed to. As one of the pioneers in the space, Bitcoin is poised to play a pivotal role in this impending revolution.
- Regulatory clarity: As regulatory frameworks around cryptocurrency grow more transparent, this may eliminate a significant barrier to entry for many institutional investors, potentially leading to increased demand for Bitcoin. A clearer framework for ownership, taxation, and transaction processes should also inspire app developers to work with cryptocurrencies, followed by rising consumer interest.
- Bitcoin halving: Last but not least, the next Bitcoin “halving” is expected to occur next spring. These events reduce the rate at which new Bitcoins are created, roughly four years apart. For sound economic reasons, these halvings have historically led to significant price increases, due to reduced supply and increased mining costs.
Past performance is no guarantee of future market moves, of course, but the crypto market has been strongly cyclical so far and the next upswing should be right around the corner. I recommend taking a closer look at crypto investments in June 2023, with a strong focus on the Bitcoin opportunity.