Why Bitcoin's Incredible Growth May Be Your Path to Wealth

Bitcoin's historic gains are nothing short of magnificent.

Bitcoin (BTC) has undoubtedly been one of the best financial assets. In the past decade, the price has skyrocketed an unbelievable 15,600%. For comparison, the S&P 500 has produced a total return of just 250% during the same time.

As of this writing, Bitcoin trades 14% off its peak price, which might look like an attractive entry point for some investors. It will certainly be a volatile ride, but this top cryptocurrency could generate serious wealth over the long term. Here's why.

Standing above the troubled fiat system

It's first important to understand what makes Bitcoin special. Investors should realize the problems with the current fiat system. The U.S., for example, is the world's dominant economy, but it has consistently run a fiscal deficit, resulting in a burgeoning debt burden of $35 trillion. This doesn't include the troubling $69 trillion in unfunded Social Security and Medicare liabilities.

With the Federal Reserve cutting interest rates, the U.S. dollar will continue to be debased as the money supply climbs. Understanding this unsustainable situation, pseudonymous Bitcoin founder Satoshi Nakamoto created the cryptocurrency as a solution. Bitcoin has a declining rate of inflation that cannot be altered without consensus among the majority of nodes, contrasting sharply with the rampant money printing in the fiat system.

Another key trait is its fixed supply cap: there will only ever be 21 million Bitcoin tokens in circulation. This makes Bitcoin a finite digital asset, providing an escape from the brewing problems in the global economy.

Today's Change: (2.76%) $1,709.15
Current Price: $61,866.70

Greater interest from the investment community

The investment community has slowly started to recognize Bitcoin's compelling characteristics, with growing demand for the asset over the years. In January of this year, the Securities and Exchange Commission approved spot Bitcoin exchange-traded funds (ETFs) for the first time. Major Wall Street asset managers have acknowledged their customers' desire for exposure to Bitcoin, resulting in significant capital inflows.

Bitcoin's importance has also escalated in the current election cycle, with former President Donald Trump declaring intentions to build a strategic Bitcoin reserve. This highlights Bitcoin's growing significance.

As understanding of Bitcoin increases, it is likely to be viewed as a safe haven asset, evidenced by its 1,170% gain since the onset of the COVID-19 pandemic. Additionally, its low long-term correlation to other financial assets benefits portfolio diversification.

Play the long game

Bitcoin has been around for about 15 years and has bounced back stronger after every major drawdown, proving to be anti-fragile and resilient. The longer it survives and thrives, the greater the probability it will remain relevant.

However, it will continue to be a volatile financial asset, with a market cap of $1.3 trillion. Anyone looking to own Bitcoin must adopt a long-term mindset to benefit from the potential of generating serious wealth from it.