Bitcoin (BTC +2.51%) has struggled since October when a wave of liquidations rattled investor confidence. On Feb. 5, it slipped below $63,000 and is down over 30% in the past three months. It has erased all the gains it made since President Donald Trump's election, when pro-crypto optimism ignited a spectacular 2025 rally.
CRYPTO: BTC
Key Data Points
This year is a different story. Uncertainty rules in various forms, from crypto regulation to Bitcoin's long-term narrative and the broader economic outlook. If you've been looking for a reasonable entry point, the current climate of fear could represent an opportunity.
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Here are two scenarios in which it makes sense to dive in, and one where it would be better to look elsewhere.
1. Buy Bitcoin if you think institutional investment will continue
Rising institutional investment was a significant driver behind Bitcoin's last price surge. Following the approval of spot Bitcoin ETFs in 2024, these funds are among the biggest holders of Bitcoin. Even if the government doesn't pass further crypto regulation, legislative shifts have already made cryptocurrency more appealing to institutional investors in both the U.S. and Europe.
In addition to spot Bitcoin ETFs, institutional confidence and adoption are growing. Last October, Morgan Stanley told its advisors they could offer crypto to all clients, not just ones that met certain criteria. Bitcoin may also attract more retirement money. A White House executive order last summer and recent comments from the SEC could pave the way for more crypto in 401(k)s and other retirement accounts.
2. Buy Bitcoin if you're optimistic about its long-term potential
It is hard to overstate the importance of sentiment in cryptocurrency. When gloom rules, it can feel like nothing will lift prices. We saw this in the last crypto winter, as Bitwise CIO Matt Hougan pointed out on social media. In spite of regulatory progress and increased adoption, Bitcoin might fall further in the near term.
Zooming out, Bitcoin has always recovered from even severe dips and gone on to set new highs. This time could be different, but Bitcoin's long-term credentials have never been better. In addition to institutional investment, the grandaddy of crypto could play a role as a currency in emerging markets, a vault that supports on-chain transactions, and a component of corporate and government treasuries. That's why Ark Invest believes it can reach between $300,000 and $1.5 million by 2030.
3. Don't buy Bitcoin if you're looking for digital gold
As we saw above, Bitcoin has several potential use cases. However, the digital gold argument doesn't stand up. Sure, Bitcoin's finite supply and non-sovereign, decentralized nature give it certain commonalities with gold. It's also easier to transport and trade.
Unfortunately, it is more volatile than gold, and recently its price has had more in common with tech stocks. Time and again, it hasn't proven itself as a safe-haven asset. If we see increased geopolitical tensions, heightened inflation, or a falling dollar, there are no guarantees people will turn to Bitcoin for safety.
There's always a risk you're catching a falling knife when you buy any asset during a crash. But if you see the long-term potential, now may be a good time to buy Bitcoin. Just make sure it only accounts for a small portion of your portfolio.
