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3 reasons to buy Bitcoin like there’s no tomorrow
Bitcoin is just starting out and has many other benefits to offer investors.
As tempting as cryptocurrencies may be, they are risky. While the blockchain technology powering these assets is innovative and has the potential to transform finance as we know it, their role in the future remains ambiguous and borderline murky.
However, there is a cryptocurrency with a proven track record that offers investors the safest exposure to the best the cryptocurrency market has to offer. That’s why I’m buying Bitcoin (Bitcoin -1.41%) as if there were no tomorrow.
Image source: Getty Images.
1. The halving effect
On April 19, Bitcoin experienced its fourth halving. They occur roughly every four years, and halvings form the foundation of Bitcoin’s robust monetary policy, which prioritizes preserving scarcity value while reducing inflation by half. With the fourth halving now over, Bitcoin’s inflation rate is now 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 run, 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, its decreasing inflation rate will put more pressure on its limited 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 a halving occurs, Bitcoin grows by an average of 125%. If measured year-to-date, its price would sit at just over $100,000, meaning there is still generous return potential today, even with a price of 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 grown by over 400%.
2. Maximum institutional interest and clearest role in the financial landscape
For much of Bitcoin’s existence, its rise to the top has been driven by retail investors. But now things are about to change. With the approval of Spot Bitcoin ETF, institutional investors with large 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 limited supply, pressure it likely hasn’t seen since its early days.
On a semi-related note, the fact that Bitcoin was even approved as a spot ETF is an indicator of the current market perception of it and its role in the financial landscape. For example, let’s consider this Ethereum (CRYPTO:ETH), the second most valuable cryptocurrency, is in the midst of an intense debate over ETF approval as regulators try to determine whether it is a security or a commodity. If this conversation is about Ethereum, you can guarantee that every other cryptocurrency will be similarly questioned.
Now, I’ll be the first to admit this just because the Securities and Exchange Commission (SEC) thinking that a cryptocurrency is a security does not mean that it is the end for a particular blockchain. Most of these assets are fairly decentralized and would continue to operate even if the SEC initiated litigation. Remember, 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 him a commodity and beyond its scope of oversight. This gives it unique staying power and an added level of assurance that it will not be hampered by regulatory scrutiny.
3. In a class apart
Likewise, Bitcoin has generated significant institutional interest and has such a clear designation in the financial landscape due to its key features, which make it unique compared to virtually every other cryptocurrency.
When you invest in Bitcoin, you are investing in the most decentralized, secure and proven cryptocurrency on the market. There is no single group that oversees its operations. We don’t even know who created it. All we know is this its creator was called 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, making them much more likely to fall under the purview of the SEC.
In contrast, Bitcoin has operated more or less in its original form for the past 15 years, without 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
When you add it all up, I dare say there is never a bad time to invest in Bitcoin. Are some moments better than others? Safe. Investing in the depths of the cryptocurrency winter should offer better returns than investing at the highest levels. However, data shows that as long as investors hold long enough, even if you bought at the top, you 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 demonstrate why it is unlike any other asset. Michael Saylor, well-known Bitcoin investor and CEO of MicroStrategy (which owns about 1% of Bitcoin’s total supply), could have said it better: “I will buy at the top forever.”