The good news for crypto investors is that Bitcoin (BTC 0.24%) is up 65% for the year. At its current price of $70,000, it is now within striking distance of its all-time high of $73,750 from earlier this year.
The bad news, though, is that the cryptocurrency has largely underperformed expectations this year and has struggled to break through the $70,000 mark for several months now. As a result, some investors are taking a wait-and-see approach or moving their money elsewhere. Should you be doing the same, or is now the time to buy?
Bitcoin and investor expectations
To answer that question, it's important to understand how investor expectations for the digital coin have steadily ratcheted down since the beginning of the year. In January, investor excitement around the launch of the new spot Bitcoin exchange-traded funds (ETFs) drove a huge rally that eventually pushed it to an all-time high of $73,750 in mid-March.
No surprises here, but at the time, analysts were predicting that Bitcoin would easily push through the $100,000 mark within months. What actually happened? Investor inflows into the spot ETFs began to slow, and actually came to a halt in August, when the crypto market struggled with a "flash crash" that sent all cryptocurrencies lower.
And don't forget about this year's Bitcoin halving event. This, too, was supposed to send its price soaring. There have been three previous halvings -- in 2012, 2016, and 2020 -- and each one has sent the crypto skyrocketing to a new all-time high, so hopes were extremely high for the April 2024 halving.
In 2020, for example, Bitcoin began its stratospheric ascent to $69,000 after the halving. But thus far, the 2024 halving has overpromised and underdelivered. It is now trading only 10% above where it was seven months ago, and many investors may have forgotten about the halving entirely.
Bitcoin vs. other "risk on" assets
It is also underperforming on a relative basis versus other popular cryptocurrencies. Meme coins Dogecoin and Shiba Inu, for example, are both up more than 70% for the year. Other meme coins are up as much as 1,000% for the year.
Bitcoin is underperforming versus crypto stocks as well. For example, MicroStrategy (MSTR 0.13%), which many investors consider to be a proxy stock for the cryptocurrency, is up a staggering 244% this year. That's nearly four times the gains of the coin itself.
And don't forget about high-flying tech stocks like Nvidia, which is up 190% this year. That's nearly three times the gains of Bitcoin. In short, investors have plenty of options if they want a high-risk, high-reward investment. The crypto is no longer the only game in town.
Key catalysts ahead
The 2024 presidential election could end up being a big catalyst for Bitcoin, if it results in a revamped regulatory environment for crypto. For the first time ever, it became a campaign issue during a presidential election, and sentiment appears to be shifting in Washington, D.C., about how to regulate digital currency.
Image source: Getty Images.
New crypto market regulation appears to have bipartisan support, and pro-Bitcoin policies are already being discussed at the highest levels. At the very least, 2025 might start with the replacement of current Securities and Exchange Commission head Gary Gensler with a more pro-crypto regulator.
Taking an even longer-term view, Bitcoin is steadily becoming a more important part of the global financial system. We're entering a new institutional era for it, in which large institutional investors are boosting their allocation, and big Wall Street firms are launching new investment products. Even if institutional investors decide to boost their crypto allocation by just 1%, it could lead to a tsunami of new money flooding into Bitcoin.
The long-term outlook
If you are thinking about investing in Bitcoin, it's important to keep a long-term outlook. Yes, it has underperformed expectations this year. Yes, it is underperforming other "risk on" assets. And, yes, two catalysts --- the launch of the crypto ETFs and the halving -- have overpromised and underdelivered.
However, the long-term outlook for Bitcoin remains unchanged. That's the reason some of the biggest names on Wall Street are still predicting that it could soar to a price of $1 million by the year 2030. And, if you look even longer down the road, that's when its price performance could be off the charts.
Michael Saylor, founder of MicroStrategy, thinks that the price could hit $13 million within the next two decades. That's a nearly 20,000% gain from today's prices!
At the end of the day, I'm placing my trust in Bitcoin's historical record and its proven ability to deliver market-beating returns. I'm buying it now at a discounted price and holding for the long haul.
