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Bitcoin (BTC 3.17%) has had a phenomenal year, winning over investors from individuals all the way to institutions and even the incoming president. The top crypto has surged 122% in 2024 (as of Dec. 30), as it once again crushed the performance of the stock market.
As we look to 2025 and beyond, you’re probably wondering if it makes sense to add this virtual asset to your portfolio, especially since it’s trading at a 12% discount to its mid-December high. I think it’s worth remaining optimistic.
Here are three reasons Bitcoin is a must-buy for long-term investors.
It is very difficult to argue with the concept that Bitcoin is now a valid monetary asset. This is the first thing that deserves to inspire investors to buy it.
As of this writing, the cryptocurrency’s market cap sits at a notable $1.9 trillion. This is a far cry from its start in 2009, when it was viewed as a silly form of internet money that only caught the attention of cypherpunks interested in prioritizing privacy and challenging financial institutions. Its current value rivals some of the world’s most dominant tech enterprises.
In January 2024, the Securities and Exchange Commission approved a spot Bitcoin exchange-traded fund (ETF) for the first time. This created a convenient, liquid and regulatory-compliant situation for the largest equity funds to begin buying. And that necessarily gave cryptocurrencies popularity among Washington policymakers and Wall Street asset managers.
President-elect Donald Trump has also publicly expressed his support. He was the keynote speaker at the Bitcoin convention in Nashville, Tennessee, in July. During his speech, he said he was looking to create a strategic Bitcoin reserve in the United States.
The virtual token has reached a point where it can no longer be ignored. It has recovered from the primary drops and has become more powerful than before. And it turns out that this is going nowhere.
Another explanation for why Bitcoin makes sense as an addition to a long-term investor’s portfolio is that it is virtual in nature. At a higher level, it is simply a large decentralized database and communication protocol. Being virtual means transcending borders. It is portable, divisible and tradable, especially compared to physical gold.
Over the past two decades, the global has become increasingly digital. The rise of the Internet, smartphones and software is a trend that is too difficult to forget and has shaped our economy.
Looking to the future, it is almost very unlikely that the world will not continue down this path, becoming even more digital, technological, and data-driven. This is especially true when we think that synthetic intelligence (AI) will play a more vital role in our lives.
“The internet will have a native currency; it’s just a matter of time,” Block CEO Jack Dorsey wrote in his company’s first-quarter 2024 shareholder letter. “Artificial Intelligence systems and agents will have to transact, and the most efficient way to do so will be a common protocol for money movement.”
In this context, it makes sense that Bitcoin, as a completely decentralized and virtual approach to moving the price to others, would continue to increase in price.
The final, and perhaps most important, explanation for why long-term investors buy Bitcoin is its scarcity. Thanks to the blockchain network’s halving schedule and constant inflation rate, there will only be 21 million coins in circulation.
This is in stark contrast to the existing financial system, in which large debt loads, excessive cash printing, and continued inflation have been normalized. As citizens around the world watch their countries’ fiat currencies degrade, it is no surprise that they realize they need to own something surely rare like Bitcoin, an asset that is not controlled through a single entity.
Bitcoin has had a tremendous run in the past 15 or so years. While future returns certainly won’t resemble historical gains, the returns can still be game-changing. Long-term investors should still consider buying the world’s top cryptocurrency.
Neil Patel and his people have no positions in any of the stocks mentioned. The Motley Fool holds positions and recommends Bitcoin and Block. The Motley Fool has a disclosure policy.
Market insight driven through Xignite and Polygon. io.