Investors love to speculate on the future potential of assets, but they also love to pull the “I could have, I could have, I should have” with the investments they passed on. No other asset seems to generate this kind of retrospective remorse more than cryptocurrencies over the past decade. Among the vast array of cryptocurrencies, there is one that tends to come to anxious investors’ minds first: Bitcoin (BTC 1.80%).
Due to its notoriety as the first cryptocurrency and also the most valuable by market capitalization, Bitcoin is probably the single cryptocurrency that elicits these feelings the most among investors who wanted to buy early. These sentiments may be valid, but the inherent characteristics of Bitcoin are conducive to providing investors with more of a buying opportunity.
Scarcity Generates Value
Thanks to Bitcoin’s programming, the growth in the supply of the cryptocurrency slows down over time. There are approximately 19 million bitcoins in circulation today out of the predefined 21 million. With only around 2 million to be created in the next 118 years, the price of a bitcoin has the potential to continually rise as supply and demand dynamics unfold.
The primary mechanism that ensures Bitcoin becomes scarce is known as the halving. Bitcoin’s code is written in such a way that every four years or so the reward for mining one Bitcoin is halved. Originally the block reward was 50 bitcoins, but today the reward is 6.25 bitcoins. This means that each mined block puts an additional 6.25 bitcoins into circulation. The next halving will likely take place in May 2024 and reduce the block reward to just 3,125 bitcoins, and this process will continue until 2140, when the last bitcoin is expected to be mined.
But until that day comes, I think people will continue to wish they had invested in Bitcoin. I guess investors will repeatedly look back and think “if I had invested in Bitcoin at that time, then I would have this amount of money”.
Hindsight is always 20/20. But whether you invested in Bitcoin at its peak last year or invested in it 10 years ago, one thing remains true: the longer you hold, the more likely you are to reap the rewards. fruits.
The numbers don’t lie
The proof is in the data. So let’s have some fun and see how much money $100 would be worth if you had invested in Bitcoin when it first halved. Back then, the Bitcoin price was only $12. By the time the next halving took place in July 2016, when Bitcoin was worth $665, your $100 investment would be worth over $5,000.
Now let’s say you kept your initial investment of $100 until the last halving, which happened on May 11, 2020. At the time, Bitcoin was worth around $8,800. That same $100 investment would now be worth over $70,000 – an incredible increase of almost 75,000%.
While we can never time a market and shouldn’t try, if you had sold the original $100 at the top of the market in November 2021, your $100 investment would be worth an almost inconceivable $575,000.
If you take a closer look at Bitcoin’s return around the halving events, another pattern should become clear: product returns are significantly lower than the previous halving period. Between the first and second halving, Bitcoin rose the most in its history, an incredible 5,300%.
From the second halving, when Bitcoin was worth $650, and from the third halving at a price of around $8,800, the price rose by 1,253%. Even if the percentage return between the third halving and the forthcoming fourth halving were to quadruple as in the past, it would still result in a 300% return – not bad.
It is not too late
These numbers might elicit some FOMO (fear of missing out), but if past Bitcoin price trends continue to repeat themselves, then in reality, there is no better time to buy Bitcoin than now. And if you’re looking to maximize your upside potential, you need to do one thing: hold at least a bitcoin halving.
So if you bought at the top in November 2021 when Bitcoin was worth nearly $69,000, then 2022 was a disappointment. If I can give any advice, it is to hold out until May 2024 and use that time to strengthen your position while prices are low. Eventually, one day, your present belief will be the envy of those of the future.