Bitcoin (CCC:BTC-USD) has recovered from its recent trough price of $29,807.35 on July 19. I suspected this would be the case in my last article on June 23, when I argued the contrarian thing to do was buy Bitcoin. I still think this is the case and in fact, I think Bitcoin will be significantly higher over the next year.
Since its recent trough on July 19, the BTC token price was up 48.1% to $44,170 as of Aug. 12 — and climbing. This is a huge rebound and puts the cryptocurrency up over 50.3% from Dec. 31 when it closed at $29,374.
In other words, most of the gain this year so far has occurred in the last three weeks. So what has happened?
Where Things Stand With Bitcoin Now
Bitcoin has been rising lately after the “sell in May” trades took all cryptos down very significantly. I suspect that heavy institutional interest in Bitcoin as well as its increasing popularity among corporate treasurers and CFOs could be another cause for its gains.
And, of course, this could also be part of a normal “distribution” cycle where weak hands sold out at the peak and now stronger, more convinced, and convicted long-term holders buy into the digital asset.
Lately, according to Barron’s, there has been concern that Congress will begin to tax not only exchanges but also software developers and digital asset mining companies. I believe that this issue will need to be clarified or else some miners may go overseas rather than stay in the U.S.
Nevertheless, let’s keep in mind that the investing public has become more comfortable with Bitcoin. That is despite the latest downturn in its price. The fact is that Bitcoin fell from its peak on April 12 of $63,503 to the trough of $29,807 on July 19. That represents a decline of $33,696.
However, now that Bitcoin has rebounded it is down only $19,333 since its drop from the peak, or just 30%, a little over half of the total decline. But even more importantly for most investors, the year-to-date loss at the trough was not that bad. Since BTC was at $29,374 at the end of 2020, and the trough point was at $29,807, it did not lose money in 2021. That is key to why Bitcoin is now being seen as not as volatile, despite the huge decline from its peak.
What to Do With BTC Now
Some now believe that cryptocurrencies and Bitcoin in particular are no longer in the early period of acceptance and adoption. According to a recent article in Cointelegraph, the CEO of Bittrex Global, a blockchain digital asset trading platform, believes that “Crypto is no longer in the early adoption phase.” The article gives examples of where Bitcoin is being accepted by mainstream businesses around the world, including El Salvador where it can be used as a means of payment.
Investors should now consider taking a small stake in either Bitcoin or Ethereum (CCC:ETH-USD), the two largest cryptos. Almost all major brokerage firms allow you to buy these digital tokens. Some even allow cryptos to be bought on margin. You can also buy them directly and simply on Coinbase Global (NASDAQ:COIN) and Binance US, which has a much larger selection of cryptos.
For some unknown reason, the SEC still does not allow any cryptocurrency exchange-traded funds. I am not a great fan of ETFs, but in this case, I think it would serve a really valuable function. They will allow investors to gain exposure to a number of cryptos, including Bitcoin, for investors.
In short, expect to see Bitcoin recover this year and provide a good return over the next year. It will gain in popularity and acceptance through the market as it recovers.
On the date of publication, Mark R. Hake owns a long position in Bitcoin and Ethereum but did not own any other security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
