In the last decade, S&P 500 and on Nasdaq Composite have achieved superior total returns (including dividends) of 186% and 260% respectively.
whatever cryptocurrency the market created an even bigger winner: Bitcoin (BTC 0.00%). The world’s most valuable digital asset has skyrocketed over the past decade. Its current price of approximately $34,600 (as of October 31) is almost 17,000% higher than it was on the same day 10 years ago.
This means that a relatively small investment of $1,000 back then would be worth $168,000 today. Good luck finding a more effective asset than this one!
Let’s take a closer look at what has helped develop this top cryptocurrency throughout its history. And then, looking at things from today’s perspective, investors can figure out if Bitcoin should be in their wallets right now.
A new form of money
Unlike most financial assets that start with institutional adoption, Bitcoin was unique in that its early proponents were people, mostly computer scientists, who valued privacy and autonomy above all else. And it makes sense why they thought that way.
Bitcoin was launched about 15 years ago on the heels of Great Recession as a new form of money that was not controlled by anyone. Seeing the turmoil caused by the subprime crisis, the massive bailouts that occurred, and the unprecedented stimulus efforts by governments, Bitcoin’s pseudonymous founder, Satoshi Nakamoto, created a solution. And the first cryptocurrency was born.
To be clear, Bitcoin has been seen mainly as an investment tool until now for those looking for financial gains as opposed to actual transactional use. In fact, since the network can only handle five transactions per second, some wonder if this cryptocurrency will ever see more use.
However, it’s hard to argue with Bitcoin’s astronomical price rise historically. Although it is an extremely volatile asset, it has always reached higher highs. It is currently about 50% below its November 2021 peak price.
And to show how far Bitcoin has come, it’s worth looking at the vast infrastructure of supporting products and services out there. Bitcoin-only businesses provide bitcoin individual retirement accounts and loans secured by the digital coin. Coinbase Global, PayPal Holdingsand Block enable individuals and institutions to buy and sell it. There are payment companies focused on Bitcoin. And many famous companies accept it as payment.
Bitcoin has also found its place in the wallets of large corporations and billionaire managers. El Salvador even accepts it as legal tender within its borders. Over time, this growing interest has certainly helped boost the price of crypto.
Is now the right time to buy bitcoins?
I believe it is reasonable to assume that the next 10 years for Bitcoin will not come close to the past. If this cryptocurrency has the same compound annual growth rate as it has over the past decade, its market cap will be an absurd $114 trillion by November 2033. That’s simply unrealistic.
But that doesn’t mean it’s not a worthwhile investment right now. As I noted earlier, its current price is well below its all-time high, so buying the dip is an option in the hope that it will make a new high again, as it has always done.
A major catalyst is also on the horizon. In another sign that cryptocurrency is slowly becoming more mainstream, the Securities and Exchange Commission’s approval of spot exchange-traded funds is seen by industry experts as inevitable. The only question is when. This could open the floodgates for a lot of institutional capital to flow into Bitcoin.
Investors who believe in the prospects of this cryptocurrency should seriously consider adding a small allocation to their portfolios.
Neil Patel and his clients have positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin, Block, Coinbase Global and PayPal. The Motley Fool recommends the following options: short December 2023 $67.50 put on PayPal. The Motley Fool has a disclosure policy.