Summary:
70% of millennials and over half of Gen Z investors are likely to own cryptocurrencies.
Bitcoin's long-term performance shows strong demand, with a $1,000 investment today worth $118,000.
Bitcoin is an anti-inflationary asset, with a maximum supply of 21 million coins.
Expect volatility; Bitcoin can drop 10%, 30%, or even 60% from its peak.
The Motley Fool Stock Advisor identified the 10 best stocks to buy, and Bitcoin was not one of them.
Cryptocurrency has become a mainstay investment for younger investors. According to research by The Motley Fool, roughly 70% of millennials and more than half of Gen Z investors surveyed are at least somewhat likely to own cryptocurrencies. About 75% of crypto buyers view it as an investment, not just a quick-money gamble.
However, cryptocurrencies can be very volatile, which can test even the most unflappable investors. Among many options, Bitcoin (CRYPTO: BTC) remains a top choice for long-term investors. Here’s why Bitcoin could make you a ton of money over the long haul.
It's Already Done It
Cryptocurrencies differ from stocks. Stocks represent businesses with intrinsic value, while cryptocurrencies depend solely on supply and demand. Bitcoin's long-term performance is significant; in 2021, it reached heights during a bubble caused by zero-percent interest rates, while many cryptocurrencies have not revisited those peaks since the bubble burst in 2022.
What does this mean? Demand for Bitcoin has grown over time, supporting higher prices. Bitcoin has outperformed the stock market over the past five and ten years. A $1,000 investment made a decade ago is worth $118,000 today. While it's uncertain whether these returns will continue, Bitcoin's long-term performance highlights its strong demand, contrasting with most cryptocurrencies.
Can It Keep Going?
Bitcoin is an anti-inflationary asset. Miners create new bitcoins, but the pace slows as supply grows, with a maximum cap of 21 million coins (approximately 19.8 million currently in circulation). Limiting supply supports higher prices as demand grows. If demand for Bitcoin rises faster than supply, its price should increase.
Additionally, Bitcoin's price is in U.S. dollars, which are constantly increasing in supply. Inflation weakens the dollar, potentially boosting Bitcoin's price. These factors could drive Bitcoin's price higher over time, although long-term price targets are fiercely debated.
Should Investors Buy Bitcoin Today?
Expect volatility with Bitcoin. It often drops 10%, sometimes 30%, and can decline over 60% from its peak. Bitcoin does not represent an underlying asset or business, meaning there are no guardrails when investors sell or bid prices up.
The best strategy for investing in Bitcoin is to buy slowly and often through dollar-cost averaging. This helps build an investment across various price points, resulting in a blended average. You'll avoid buying at extremes but should have ample room for returns if Bitcoin continues its past performance.
Should You Invest $1,000 in Bitcoin Right Now?
Before you invest, consider this: the Motley Fool Stock Advisor team identified the 10 best stocks for investors to buy now, and Bitcoin wasn’t one of them. The stocks that made the list could produce significant returns in the coming years.
For example, if you had invested $1,000 in Nvidia when it made the list on April 15, 2005, you would have $630,099 today!
The Stock Advisor service has more than quadrupled the return of the S&P 500 since 2002.
Justin Pope has no position in the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. For further insights, check out the Motley Fool disclosure policy.
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