Pondering Over the Purchase of Bitcoin When Its Value is Below $100,000?
2024's Bitcoin Bonanza and the Breather Before the Bounty
Savvy Bitcoin (BTC) investors had a field day in 2024—the digital asset's value more than doubled, making it a lucrative investment. But even as Bitcoin finished the year at a staggering $92,000, it was a measly 15% short of its all-time high. The question on everyone's lips was—should you jump on this opportunity while Bitcoin's price is still below the coveted $100,000 mark?
Taking a Break, Not a Nap
Bitcoin saw a remarkable surge in demand after the election, as the investment community painted a rosy picture of the incoming administration's crypto-friendly stance. But then, Bitcoin hit a speed bump and took a much-needed break. For some, this pause was a golden chance to snag the cryptocurrency at a discount.
Investing in Bitcoin has always come with its fair share of price fluctuations—volatility is just part and parcel of its 16-year legacy. Long-term hodlers, the crypto equivalent of long-term investors, have become quite accustomed to riding out the ups and downs. Over the years, Bitcoin's price has plummeted by more than 50% on multiple occasions and by over a third in many instances. Yet, every time it took a nosedive, Bitcoin managed to bounce back with renewed vigor.
The Gold-Like Allure of Bitcoin
Bitcoin bulls often draw parallels with the venerable gold as a store of value. At first glance, the comparison seems quite apt. Just like gold, Bitcoin's value emanates from the fact that people ascribe it with worth.
Gold is a rare commodity with a finite amount available on Earth. Its limited supply, coupled with its myriad uses—from jewelry to investment medium— accounting for its value.
Just like gold, Bitcoin boasts supreme scarcity, as the mining process allows for only a fixed 21 million coins. About 19.8 million of these have already been mined as we speak. Despite the Earth's seemingly limitless gold reserves, Bitcoin is far more scarce. Another fascinating aspect of Bitcoin is that it's easier to transport, convert, and use for transactions than gold.
Eyeing Significant Upsides
Measuring Bitcoin's fair value using traditional stock valuation metrics like P/E or PEG ratios is a fool's errand—Bitcoin generates no cash flow or revenue. Comparing it to gold can, however, shed some light on its potential. At its current $17.7 trillion market cap, gold has secured its place as a store of value for millennia. Should Bitcoin rise to the same heights, its price could exceed the stratospheric $900,000 mark based on its 21 million coin supply. Now, that wouldn't be so bad for anyone currently holding Bitcoin at a mere $100,000, would it?
[1] Sakunyabhum, R. (2022, March 30). Bitcoin ETFs: Everything You Need to Know About Crypto Market Expansion. Investopedia. https://www.investopedia.com/terms/b/bitcoin-etfs.asp[2] Lansdowne Partners. (n.d.). Bitcoin's Scarcity: Benefitting from a Fixed Supply. Lansdowne Partners. https://www.lansdownepartners.com/news/bitcoins-scarcity-benefitting-from-a-fixed-supply[3] CryptoWarrow. (n.d.). Bitcoin Price Prediction 2030. CryptoWarrow. https://www.cryptowarrow.com/bitcoin-price-prediction/bitcoin-price-prediction-2030[4] Katahira, A. (2021, May 14). The Importance of Scarcity in Bitcoin and Managing Its Price Cycles. Medium. https://medium.com/@akira_katahira/the-importance-of-scarcity-in-bitcoin-and-managing-its-price-cycles-5a8de660c920
- Some investors, seeing Bitcoin's dip as a potential 'dip' before a significant upswing, viewed this break as a perfect opportunity to invest more money into Bitcoin, with hopes of reaping substantial returns by 2024.
- The financial industry often discusses the necessity of diversifying one's portfolio, and incorporating Bitcoin, with its potential for high returns, might be a smart move for individuals with a long-term outlook towards finance and investing.
- In the ever-changing realm of finance, Bitcoin's price volatility might seem daunting to some, but for savvy investors, it's just another chance to invest in the cryptocurrency at a lower price, fearlessly anticipating a future 'bitcoin bonanza'.
- Although Bitcoin's price has experienced considerable fluctuations, a considerable segment of the investing community remains confident in its potential, seeing it as a promising investment option in 2024, when it could reach unseen heights, echoing gold's storied reputation as a reliable store of value.
