Bitcoin (BTC 3.25%) has fallen to below $70,000, and today, it's been trading below even $67,000. Although the stock market has been doing well and the S&P 500 has been hitting new highs this year, there hasn't been much excitement around the crypto markets of late. Bitcoin, which surged to highs of more than $126,000 last year, is now down nearly 50% from its peak.
Could buying Bitcoin now, while its value is below $70,000, be a great move for the long run?
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Will Bitcoin bounce back this year?
Things began to turn bearish for Bitcoin back around November of last year, when the market as a whole started to show some weakness, with investors growing concerned about rising valuations. While stocks recovered and came roaring back afterward, that simply hasn't been the case with Bitcoin. Instead, the leading cryptocurrency has continued to decline in value and is now down 24% since the beginning of the year.
Investors may be concerned about rising inflation and the possibility of interest rates rising in the near future, which is often a negative development for speculative investments such as Bitcoin. If that scenario plays out, things could get even worse for the digital currency in the months ahead.
For Bitcoin to rally and bounce back this year, there needs to be a catalyst. It could be an improvement in economic conditions or more optimism around interest rate cuts, but something needs to happen for excitement to return to Bitcoin. As of now, however, nothing appears to be on the horizon for investors to rally around.
CRYPTO: BTC
Key Data Points
Is Bitcoin worth buying right now?
If you believe some of the ambitious price targets for Bitcoin in the long run, then it might be a no-brainer buy right now, regardless of what happens in the short term. And it would have been a no-brainer buy even at its recent highs. Ark Invest's Cathie Wood, for instance, projects that Bitcoin could rise to well over $1 million within the next five years.
The fundamental problem with Bitcoin, however, is that its valuation is highly speculative. Its value can and has changed rapidly, even over just the past 12 months. If you're bullish on its potential to reform global markets, then it may be worth buying right now. But if you're more skeptical about its future (as I am), then it may still not be worth buying, even at less than $70,000. While its valuation is much lower than it was several months ago, there is no guarantee that it won't continue going lower this year.
Ultimately, the decision comes down to your outlook on the cryptocurrency. However, Bitcoin is a highly risky asset to hold, and that's why if you're looking to buy it, you may want to take only a small position in it (i.e., less than 5% of your portfolio), as that may give you some diversification without putting your portfolio at too much risk.
