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At $60,000, Is Bitcoin Too Expensive?

By Motley Fool Staff - Apr 8, 2021 at 6:51AM

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The leading digital currency is near its all-time high. Is it still a good time to buy?

Bitcoin (BTC -1.06%) has risen dramatically to a price tag of nearly $60,000 as of early April. Is it still a good time to add the leading cryptocurrency to your portfolio? In this Fool Live video clip, recorded on March 18, senior analyst John Rotonti and Motley Fool Deutschland lead analyst Bernd Schmid discuss Bitcoin's price tag and how investors should think about it. 

John Rotonti: So Bitcoin's price has skyrocketed recently. I think it's somewhere around $60,000 U.S. per coin. Is it too late for investors to get in?

Bernd Schmid: I don't think so. I personally don't buy it anymore. It always depends when you get in. I look at it from a portfolio perspective. But I think how I look at it, what could happen to Bitcoin with short term or in the longer term, the one thing I mentioned before, is the $1 trillion market cap compared to what Bitcoin might be in the future. I think a very likely use case is Bitcoin could be the digital gold. Then it could still 7X from today until whenever this might happen, or it could, like I mentioned, if it replaces more than just gold, the value could theoretically be even higher. I think it's the best way to get at least the gauge of could this thing be worth. It's certainly not too late, but, and this is what I want to mention, based on historical cycles, there's about a four-year cycle, which Bitcoin has, and Bitcoin has actually dropped every four years by about 80-90%.

Rotonti: Where are we in that cycle? Do you know where we are in that cycle? Year two, year three?

Schmid: Yes. Actually, the pool part of the cycle is quite short. I think it's about a year, don't fix like I'm not 100% sure. But we are like in the middle of same, in the beginning to middle. Actually, I have a chart what I did and actually PlanB, but I mentioned before he does as well. I did it myself. I chartered the last two cycles and the average of the last two cycles. Right now and the last two cycles you have from the start of the cycle about a 30X to 50X in terms of price movement. So from whatever, from $100 to $5,000 or last time, I think the top was about $20,000. This cycle started with around between five and $10,000. So if you count the 20x, you would be somewhere between $100,000 $200,000, that's where this can go into the cycle. Even when we talked about this cycle, I personally, if you think the top will we reached in the same timeframe like last two cycles, shifted, it will be reached about mid-to-end or begin mid-end. Two to three times increase of Bitcoin until the top is being reached in a couple of months. But then be aware, you never know what's going to go. You don't know if the top is, maybe even sooner, and there might likely, I think there will be a drop by 80% at some point of time I think. I still believe.

Rotonti: That's fascinating Bernd and I love how you scale it by comparing it to real gold. Because if this is the digital gold and it's currently got a $1 trillion market cap. I think you said so far we've mined about $7 to $10 trillion worth of gold, right? so if there's a potential 7-10x run from here, potentially.

Schmid: You know, if you look at it from a value investor's perspective, you actually know that's tough, actually. It never only goes to the value of actually has it always overshoot and undershoot. So it's quite likely that you go even beyond that. You just never know when all these things are going to happen. But one thing is certain, that are relatively certain is that we will have very high volatility. You might be down 50% in a short amount of time. You have to start like these kind of things and consider it if you invest into it.

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