The price of Bitcoin (BTC +1.27%) is back over $100,000. But many experts believe there's a lot more room to run. One major investor, Arthur Hayes, even thinks that Bitcoin's price will rise above the $1 million mark sometime over the next 3.5 years.
If you've been waiting to invest more money into Bitcoin, there are two reasons why you should make a move before 2026 arrives.
CRYPTO: BTC
Key Data Points
This is the golden rule of investing in Bitcoin
At their core, currencies are not income-producing assets and they contribute nothing beyond their existence as a transaction-settling financial tool. Everyone believes that a U.S. dollar retains value. In return, a dollar bill has value and can be traded in exchange for something else. Of course, the U.S. government does have taxation and military powers with which it can back up the dollar's value. But in reality, the only foundational value a single dollar bill has is the idea that it has value.
The same can be said of Bitcoin. Yes, there is a decentralized consensus mechanism that is novel, plus a growing ecosystem of applications and services that use Bitcoin as a means of exchange. But most of Bitcoin's value comes from the idea that it has value. It's a financial tool that can settle transactions, not really different from the U.S. dollar. This reality has caused many investors to call Bitcoin a bubble. And in many ways, it is. It is an asset whose valuation is determined by social whims. But again, this isn't much different than any other currency. The main difference here is that traditionally, currencies are backed and controlled by nation-states. Bitcoin, meanwhile, is essentially controlled by a predetermined algorithm that dictates its long-term inflation rate, a rate that will ultimately drop to zero.
While there are many rules to currency investing, there is one old adage applicable to Bitcoin at this stage: The longer a currency has been around, the more legitimacy it has. This makes sense on a fundamental level. If a dollar bill has been used as a means of exchange for centuries, it's probably a good bet that its value will be maintained tomorrow, or even 20 years from now. The longer a currency is recognized by the masses, the more it is accepted by the same crowd. It's a very general rule with plenty of exceptions. But in general, it's a helpful framework for thinking about new currencies like Bitcoin.
The first Bitcoin was minted in 2009. That means Bitcoin has existed for only 14 years. Every year that passes, its legitimacy rises, adding more and more adoption avenues, and thus increasing its value. Following this logic, the earlier you buy Bitcoin for the long term the better. But if you need Bitcoin to have a more tangible use case than that of a speculative currency, the thesis below has you covered.
Image source: Getty Images.
Don't buy gold, buy BTC
Don't believe that Bitcoin has the ability to replace other currencies like the U.S. dollar? No worries. Its place as a store of value asset also provides reason to buy more Bitcoin today rather than wait for next year.
Right now, gold's total market cap is around $23 trillion. Bitcoin's market cap, meanwhile, stops at $2.1 trillion. If Bitcoin closes the gap with gold, there could be roughly 1,000% in potential upside to go.
Every year, more and more major investors allocate capital to Bitcoin. Scores of crypto-related ETFs have launched, many of which invest heavily into Bitcoin. Meanwhile, there's a growing list of billionaires who have put more of their portfolio into Bitcoin. All of these moves add even more credibility to Bitcoin's story. So even if it never takes off as a means of exchange, institutional buy-in legitimizes Bitcoin as a valuable asset simply to hold on to, no different than how we treat gold today.
So whether you like Bitcoin's long-term potential as a currency or simply view it as a digital version of gold, 2025 remains a wonderful time to take a long-term position.
