I first bought Bitcoin (quotation BTC) on April 24, 2020, when the price of a token was around $ 7.509. This means that my position has generated a 158% return (as of October 13) in about two and a half years. This is an impressive achievement from any point of view, and this figure has far surpassed popular stocks like Apple and Costco Wholesale.
Even with such an exceptional investment gain, especially when compared to the S&P 500's total return of 34% over the same period, I have no plans to sell my Bitcoin holdings anytime soon. Here because.
This is not a good time for risky assets
After hitting an all-time high of nearly $ 69.000 per token last November, Bitcoin is down 72% (at the time of writing). This followed the general negative trajectory of the stock market.
Inflation started to rise over a year ago and hasn't stopped. This forced the Federal Reserve to raise interest rates to slow the rise in prices in the US economy. Investors have abandoned risky assets in favor of safer ones, and this change has hurt Bitcoin and the cryptocurrency market as a whole.
Tightening liquidity, coupled with a weakening economic environment, could pave the way for a recession in the near future. As a result, this could mean even greater downward pressure on Bitcoin in the near future.
Perhaps, in hindsight, I would have looked smart if I had exited my position on Bitcoin at its peak in November last year, but it is difficult to correctly predict the market on a consistent basis or pinpoint the exact top. Also, sitting on a 158% paper profit right now could encourage you to sell and take profits. But this is not my approach.
Maintain a long-term mindset
Despite the drop in price, Bitcoin has generated an incredible return of nearly 14.000% since the spring of 2013. And to be clear, I remain extremely optimistic about the world's most valuable cryptocurrency over the next decade. For this reason I remain an owner.
Bitcoin is viewed by an increasing number of market participants as a legitimate store of value, the equivalent of digital gold. But Bitcoin is more divisible, useful and transportable than gold. These key characteristics could push the cryptocurrency's current market value of $ 371 billion to approach the $ 12.500 trillion total value of gold in the world. In support of my thesis there is the growing familiarity and growing appreciation of the younger generations for everything digital, a trend that will only get stronger.
Large companies, such as Block and MicroStrategy, have devoted portions of their balance sheets to Bitcoin. And big institutional investors are also coming into play. Ark Invest, the investment firm led by Cathie Wood, is extremely supportive of Bitcoin. Additionally, Coinbase recently entered into a partnership with BlackRock that allows customers of the huge asset manager to easily access Bitcoin. The increase in investor demand, especially for a scarce digital asset like Bitcoin, helps to sustain a higher price over time.
I know the path to increased Bitcoin adoption will be filled with extreme volatility, just as it has been in the past. But as long as I maintain a long-term time horizon, as I do with my entire portfolio, I have no doubt that I will be able to maintain my belief and remain a holder of Bitcoin.
