The past 60 days have been rough for Bitcoin (BTC 1.25%). The world's most popular cryptocurrency is now down more than 25% from its all-time high of $126,000 on Oct. 6.
Understandably, investors are concerned by Bitcoin's recent nosedive in price. But if you step back and take a big-picture view, there's still a lot to like about Bitcoin trading at a price of $93,000.
Bitcoin vs. other cryptocurrencies
Bitcoin still looks attractive compared to its cryptocurrency peers. After all, it's not as if Bitcoin is the only cryptocurrency that has fallen off a cliff during the past two months.
While Bitcoin is down 1% for the year, Ethereum (ETH 1.70%) is down 6% for the year, while Solana (SOL 0.91%) is down nearly 27%. More speculative names -- such as meme coin Dogecoin (DOGE 3.74%) -- are down more than 50% for the year.
Image source: Getty Images.
Bitcoin, given its size and heft, is still the benchmark cryptocurrency that takes the crypto market either higher or lower. It's almost impossible for other cryptocurrencies to trade higher when Bitcoin is stuck in a major funk. Case in point: Of the top 10 cryptocurrencies ranked by market cap, there's not one single name that's in positive territory during the past 30 days.
So while it's trendy to point out that gold is outperforming Bitcoin right now, Bitcoin is outperforming just about every other cryptocurrency. If there's a spot for crypto in your diversified portfolio, then Bitcoin deserves to occupy that spot.
Bitcoin's cyclical nature
Bitcoin is well known for its volatile market behavior. Moves up or down by 10% in a single day are nothing out of the ordinary. Even during crypto bull market rallies, Bitcoin often suffers declines of 20% or more. Thus, while recent flash crashes have been unnerving, they are really just par for the course if you're a longtime Bitcoin investor.
Also keep in mind: Bitcoin typically follows a four-year cycle of boom and bust. This timing might seem highly arbitrary, except for one key fact: Bitcoin has a halving event every four years.
Typically, Bitcoin soars after the halving event for anywhere as long as 18 months before suddenly dipping in value. It's now been more than 18 months since the most recent halving, in April 2024, so Bitcoin has arguably been living on borrowed time since October.
CRYPTO: BTC
Key Data Points
If you study Bitcoin's behavior during the past 15 years, it's easy to see the pattern: Bitcoin is the top-performing asset in the world for two to three years in a row before suffering a catastrophic collapse in the fourth year. Then the whole cycle repeats, with Bitcoin quickly recovering to hit another all-time high.
Thus, even if the current Bitcoin downturn continues, there's plenty of reason to be optimistic. Bitcoin will likely regain its all-time high of $126,000 during the next bull market cycle before continuing its ascent ever higher. It's still not out of the question that Bitcoin could hit $170,000 by the end of next year, according to JPMorgan Chase (JPM 2.70%).
Caveats for crypto investors
There are, to be sure, some important caveats for investors. One of these is potential weakness within the broader Bitcoin ecosystem. This ecosystem includes Bitcoin miners, Bitcoin treasury companies, and Bitcoin fintech companies.
NASDAQ: MSTR
Key Data Points
Of particular note, Strategy (MSTR 3.74%) -- the largest Bitcoin treasury company in the world -- has been under tremendous duress of late. The stock is down 35% for the year, and there have been rumblings that Strategy (formerly known as MicroStrategy) may need to sell some of its Bitcoin holdings to pay down debt it took on to buy the crypto. That would be catastrophic, and it would likely signal that a cascade of selling by other Bitcoin treasury companies could follow.
The good news, if you want to call it that, is that veteran Bitcoin investors have been through all this several times now. They've learned how to buy and HODL (crypto shorthand for "hold"). Although past performance is no guarantee of future results, there's now plenty of historical evidence to suggest that Bitcoin under $100,000 is still a buy.
