As of this writing on Jan. 28, Bitcoin (BTC 0.40%) trades at $89,350 per digital coin. It has hovered at this level since Jan. 21, down from an all-time high of $126,198 last October.
This retreat could be the start of the next crypto winter, with lower Bitcoin prices and struggling altcoins in store for the next couple of years. Things could be different this time, though -- maybe I'm looking at a temporary drawdown before the crypto market takes off again. And maybe (just maybe) it's the harbinger of a deeper crypto dip and the end of cryptocurrency investing as you know it.
So, is Bitcoin a smart buy around $90,000, or is it better to stay away for now? Let's take a look.
CRYPTO: BTC
Key Data Points
The bear case: Bitcoin could stay down for years
There are a few versions of this argument:
- In the first three Bitcoin halving cycles, a couple of strong years were followed by a deep dive. Then, the next halving would start another upswing at a higher price than the last one, and the four-year zigzag pattern would start another repetition. If that model still holds, 2026 should show pretty gloomy returns for Bitcoin investors.
- Regardless of the halving cycle, Bitcoin may be overdue for a price correction as the positive effects of recent market changes fade away. Exchange-traded funds (ETFs) based on spot Bitcoin prices are old news, two years after their official launch. The Strategic Bitcoin Reserve didn't add any buying activity to the public market. The Trump administration included crypto-friendly language in the election campaign, but hasn't taken much action to get the crypto ball rolling.
- Then there are the doomsday scenarios. For example, some investors never saw any value in an unofficial, all-digital currency -- what if they were right? Others expect quantum computing to unravel Bitcoin's encryption shields in just a couple of years. And maybe crypto is a good idea but Bitcoin didn't get it quite right? In that case, another currency might kick Bitcoin off its throne and take over. Any of these threats (and many others) could send Bitcoin prices to zero.
The pessimistic forecasts range from a slower cyclical recovery to complete Armageddon.
The bull case: New rules in a new crypto era
On the other hand, Bitcoin investors have many reasons for optimism.
- Spot Bitcoin ETFs made it easy to include Bitcoin in a traditional investment portfolio. The most popular fund, the iShares Bitcoin Trust (IBIT 0.30%), has amassed $69 billion of assets under management (AUM), making it one of the largest and most heavily traded funds in existence. Not too shabby for an ETF that didn't exist before Jan. 12, 2024.
- Investors are embracing this new Bitcoin vehicle, too. For instance, the iShares fund's daily trading volume and AUM are trending higher over time, with the occasional temporary jump or drop along the way.
- Thanks to Bitcoin ETFs and a less crypto-skeptical American government, institutional investors are taking this space more seriously. Old-school financial giants like Goldman Sachs (GS 4.48%) and Morgan Stanley (MS 4.05%) are registered IBIT owners. BlackRock (BLK 3.07%) manages the iShares fund, and recommends devoting about 2% of a diversified portfolio to Bitcoin holdings. That can only be good for Bitcoin's long-term value.
- Continued inflation issues in traditional fiat currencies (dollar, Euro, yen and so on) should eventually make Bitcoin an effective hedge against currency swings. I don't see this playing out in recent hyperinflation crises like the Venezuelan bolivar's 2025 meltdown, but the next collapse could be different as the digital asset market develops. After all, Bitcoin was launched as a decentralized digital currency that doesn't rely on big banks or government backing.
- After four halvings, Bitcoin offers lower annual inflation than the physical gold-mining industry. That could end the four-year halving cycle as the underlying economics are fundamentally different. Instead of wild swings, Bitcoin just might evolve into a slow-growing digital asset, which is a valuable idea of a different kind. Did I mention that gold prices are setting all-time records again? A similar chart would look good on the "digital gold" of Bitcoin.
Image source: Getty Images.
Is Bitcoin a buy today, then?
Bitcoin's bulls and bears both have brawny arguments. The last two years brought many changes, adding up to a bumpy ride and modest price gains. So I understand if you disagree with my conclusion. I'm not here to change your mind about Bitcoin, but to summarize what's going on and how you can benefit.
On that note, I see real value in the Bitcoin ETFs and expect them to keep adding value over time. Quantum computing is many years, maybe a couple of decades, away from breaking cryptocurrency encryption, giving Bitcoin and others plenty of time to adopt quantum-resistant algorithms. And Bitcoin's peerless scale makes it difficult to usurp the leader with a smaller cryptocurrency -- even if it brings better ideas and next-generation technology.
For these reasons, I expect Bitcoin to build value in the long run. A familiar crypto winter could take hold in 2026 and 2027, and that's OK. If so, I'd treat this period as a buying opportunity.
Mind you, Bitcoin ETFs and actual crypto holdings already account for nearly 4% of my overall portfolio. That's above the investment-bank recommendation of 2% that I mentioned earlier, so I might just stick with this balance. The crypto stake should expand naturally over the years if I'm on the right track.
