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3 reasons to buy Bitcoin like there’s no tomorrow
It’s easy to be bullish on the world’s most valuable cryptocurrency.
Very few assets, if any, outperformed Bitcoin (Bitcoin 0.12%) over the last ten years. Now, as this major cryptocurrency has a market capitalization of $1.3 trillion and is constantly featured in mainstream financial news, investors have no choice but to pay attention.
But you may be wondering whether Bitcoin is still worth buying, even if it is near its all-time high price. Here are three reasons why I continue to believe it’s a smart decision to add this digital asset to your portfolio.
Fixed supply
Perhaps the most interesting feature of Bitcoin is its fixed supply limit. There will only ever be 21 million coins in circulation, a limit written into the software code. And with halvings underwaythe inflation rate continues to decline.
This fixed supply contrasts greatly with many other asset classes out there whose supply can increase. Companies can raise more shares and issue more bonds. Gold miners can aggressively invest in exploring previously uneconomic areas if the price of the metal rises enough. In other words, supply can change to meet demand.
This is not the case with Bitcoin. Unless more than half of the blockchain nodes voted to change the supply limit – which is unlikely, given that it would substantially undermine the value of the entire network – the situation will remain the same.
Bitcoin’s strongest supporters see it as a direct competitor to the current monetary system. Central banks have historically increased the supply of fiat currencies while reducing purchasing power. Bitcoin is a solution to this problem.
Stamp of approval
Another reason to buy Bitcoin is related to a development that occurred this year. I’m talking about the long-awaited approval of spot ETF products. With these investment vehicles now on the market, investors can gain exposure to the price of Bitcoin conveniently. There is no need to open a crypto wallet or manage its custody. It can be purchased directly through the main brokerage operators.
This is especially useful for institutions that want to access Bitcoin securely. The approval of these ETFs can be seen as a stamp of regulatory approval by the Securities and Exchange Commission. The hope is that more capital will flow into the asset.
So far, there have been $12.1 billion in inflows into ETFs. And since the January 11 approval date, Bitcoin’s price has risen 43%, a positive indication of increased demand.
Infrastructure expansion
Bitcoin is about 15 years old. This is a small thing in the grand scheme of things, as there are companies that have been around for a century or more. So, most people probably see the digital asset as a very new and risky asset that will eventually die, calling it a Ponzi scheme or fake money on the Internet.
However, we cannot ignore the expanding list of financial products and services involved in the Bitcoin ecosystem. The previously mentioned Bitcoin ETFs fall into this category. Numerous startups are working to boost Bitcoin adoption in the long term by focusing on energy, gaming, and artificial intelligence.
There is also a well-known company, fintech company To block, is working on how to increase the utility of Bitcoin. Whether that means facilitating payment mechanisms or simply making it easy for people to buy, hold, or sell Bitcoin, the cryptocurrency is slowly becoming further integrated into the current financial system.
Bitcoin could be compared to the early days of the Internet. No one knew what the effects would be over time, but with the help of various platforms and applications built on top of them, adoption has expanded tremendously. Nowadays it is difficult to imagine modern life without it. And Bitcoin could be the next big game changer.
Investors looking to purchase Bitcoin should consider its fixed supply, regulatory stamp of approval, and expanding infrastructure.
Neil Patel and its clients have no position in any of the securities mentioned. The Motley Fool has positions and recommends Bitcoin and Block. The Motley Fool has a disclosure policy.