Bitcoin's (BTC +0.97%) rise over the past decade has been amazing to watch. After multiple drawdowns of more than 50% throughout its existence, the digital asset has repeatedly come roaring back to reach fresh highs. And now, it has become a legitimate financial asset, both on Wall Street and in Washington, drastically reducing the likelihood that it becomes irrelevant.
Investors who are late to the party might be wondering whether this leading cryptocurrency, whose price has risen 1,030% in the past five years, still has meaningful upside as we look to the future. Should you buy Bitcoin while its price is currently below $110,000 (as of June 22)?
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Waiting to break out
Over the past six weeks, Bitcoin has been trading primarily within the $100,000 to $110,000 range. After the price soared in the previous month or so (from early April to early May), Bitcoin now appears to be waiting for a breakout to the upside. There are some potential catalysts to keep in mind.
The first is the possibility that the Federal Reserve will cut interest rates. This signals looser and more accommodative monetary policy that incentivizes investors to take on more risk in an effort to earn a better return.
Another catalyst is the ongoing bull run that Bitcoin typically experiences in the 12 to 18 months following a halving. The last event happened in April 2024, so we could still see Bitcoin hit a new record high before the end of this year.
And of course, macro and geopolitical forces are in focus. Any trade resolution could provide a boost to risk assets such as Bitcoin. What's more, easing tensions in the Middle East could help improve investor confidence.
CRYPTO: BTC
Key Data Points
Bitcoin's long-term thesis
While it's easy for investors to think about short-term price movements, long-term investors understand that it's best to maintain a focus on the next five years and beyond. What matters when considering buying Bitcoin while it's below $110,000 is whether you are bullish on the digital asset far into the future.
In my opinion, all signs point to Bitcoin trending in the right direction as a more widely owned financial asset. One key variable to consider is the current monetary system. In particular, the U.S.'s rising debt burden could indirectly propel Bitcoin's price going forward.
The U.S. federal debt currently stands at a jaw-dropping $37 trillion. With no end in sight to the fiscal deficit and the likelihood that it will continue to grow, trust in the U.S. dollar and the Treasury market might start to weaken. Consequently, as fiscal debt has risen, so has the money supply. This has resulted in the U.S. dollar continuously losing value.
The question of how Bitcoin relates to the fiscal situation is something to think about. Why should Bitcoin's price benefit from growing debt and money supply? While there is obviously no direct relationship, the correlation is strong.
Macroeconomist Lyn Alden conducted a study with Bitcoin researcher Sam Callahan, which showed how closely correlated Bitcoin is with the increase in global liquidity. The connection is stronger than any other major asset class. If the U.S. dollar becomes worth less and less with each passing year, thanks to the growth of the money supply and added liquidity, then it becomes extremely compelling to own Bitcoin, which has a fixed supply. Buying and holding this scarce asset has historically proven to be a smart move despite its volatility.
Of course, what also matters is that more people -- whether that be individuals, asset management professionals, executives, or politicians -- spend more time learning about Bitcoin's properties and what makes it compelling to own. This appears to be happening.
That's why it's a smart move to consider buying Bitcoin as it trades below $110,000.
