Heading into May, it's clear the crypto market has still not fully emerged from a long winter. Warnings of potential new bank failures, more Fed rate hikes, and continuing economic weakness have all dragged down the market recently. Over the past 30 days, most top cryptos are flat or down, as investors try to figure out what's next.
Against this backdrop, my top cryptocurrency to buy right now is Bitcoin (CRYPTO: BTC). It's the rare digital token that combines an element of safety with potentially enormous upside over the long haul. Let's take a closer look.
Bitcoin as a safe-haven asset
At a time when the U.S. is experiencing a banking crisis, Bitcoin has emerged as a potential safe haven for investors. With every new bank failure, it seems, investors are shifting their money out of traditional financial assets and into Bitcoin. In part, that has propelled its gains of nearly 70% this year.
Image source: Getty Images.
That's not to say it's entirely without risk; it comes with a long history of extreme volatility and precipitous price drops. But it has historically been referred to as "digital gold," and for good reason. It's the place you put your money during times of market volatility. Even top Wall Street investment banks, such as Goldman Sachs, have argued that Bitcoin should be considered a form of digital gold.
While this golden reputation was tarnished a bit during the crypto market crash of 2022, it's hard to ignore its increasing correlation with gold in recent months. That correlation is now the highest it has been in more than a year.
Perceptions matter, and in this current market, the perception is that Bitcoin is once again becoming a form of digital gold. For that reason, I feel comfortable buying and holding for the long haul.
The upside potential
Of course, there are plenty of less risky assets that you could hold, and that's why I'm particularly infatuated with Bitcoin's enormous upside potential. Right now, it's trading at just under $30,000, but many top investors think $100,000 is a reasonable price target for 2024.
Others, taking into account upcoming changes to the crypto's algorithm next year, are predicting a huge breakout to $149,000. And Cathie Wood of Ark Invest has even predicted that Bitcoin could soar past $1 million by 2030.
These price predictions might sound outlandish, but they are rooted in quite a bit of sophisticated analysis. For example, Ark Invest uses a multi-variate economic model that looks at how Bitcoin is performing across eight major areas. By forecasting future performance in each of these areas, and then summing up the potential of each, it's possible to arrive at a worst-case, base-case, and best-case scenario over the next few years.
One variable that Ark Invest looks at is Bitcoin's increasing share of the money supply of emerging-market nations. There have been some setbacks -- such as the continuing controversy over El Salvador's adoption of the cryptocurrency as legal tender -- but the overall trend has been the greater adoption of it in nations around the world, ranging from Latin America to the Middle East to Asia.
Brazil in particular stands out for creating a regulatory framework for Bitcoin and other crypto assets at the very end of 2022. As long as this international adoption continues, the upside potential is tremendous.
Buy and hold
Best of all, Bitcoin arguably has the best regulatory outlook of any of the major cryptocurrencies. Securities and Exchange Commission head Gary Gensler has long agreed that the token is not a security, and that means investors can sleep easier at night, knowing they probably don't have to worry about regulatory overreach in the U.S. market. At the same time, international jurisdictions are changing their regulations to be more favorable.
For all of these reasons, I remain bullish in both the short term and the long term. It is a unique cryptocurrency that combines an element of safety with the potential for enormous long-term gains. If you are looking for a crypto to buy in May, then look no further than Bitcoin.
