Since hitting a peak in early October, Bitcoin (BTC 0.40%) has dropped 27% (as of Dec. 9). Forced liquidations have added pressure, while trade and macro uncertainty could also be weighing on what investors consider risk assets. Whatever the recent trend is, it doesn't take away from the fact that this cryptocurrency has soared 22,000% in the past 10 years. This monster gain is hard to ignore.
But is Bitcoin the most compelling digital asset for long-term investors?
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Look at Bitcoin on its own
For those who view Bitcoin by itself, it's difficult not to come away impressed. When Bitcoin launched about a decade and a half ago, it was the first time ever that two unrelated parties could transfer value to each other digitally without the need for an intermediary. The technology built upon previous innovations, and the timing is hard to overstate, as Bitcoin's success leveraged the ongoing rise of the internet.
Bitcoin is a digital, decentralized, and global monetary network that aims to compete directly with the current financial system. Besides that, it's the first time the world has seen digital scarcity. There will only ever be 21 million units of Bitcoin in circulation, and it's extremely difficult to tamper with the blockchain, as this would require massive amounts of energy and computing resources. In other words, Bitcoin is a digital network that is rooted in the physical world.
By design, Bitcoin is very interesting. But it doesn't operate in a vacuum.
CRYPTO: BTC
Key Data Points
Bitcoin will continue to attract more capital
Economic actors -- individuals, companies, financial institutions, and governments -- have woken up to Bitcoin's remarkable characteristics. These stakeholders are accumulating the asset or building unique products and services that can help support adoption, whether that's in payments, lending, or energy, for example. The regulatory backdrop is also favorable.
Over short periods of time, Bitcoin will continue to exhibit volatility. This is also true of many stocks out there. However, it should keep attracting more of the world's wealth over time. This is precisely what billionaire Michael Saylor believes will happen. He predicts that by 2046, more wealth will have flocked to Bitcoin, driving its price to $21 million per coin. Investors might want to take that forecast with a grain of salt, but the logic of wanting to own a digital, scarce, and borderless asset makes sense.
Even after such a monumental historical gain, Bitcoin remains the most compelling digital asset for long-term investors to consider owning. It's the most promising cryptocurrency out there, and it's arguably the one that poses the least amount of risk in one's portfolio.
