I’ve been a bull on Bitcoin (CCC:BTC-USD) for the past several years. I’ll likely be a bull for the next several years — at least.
All the way back in 2014, I first recommended Bitcoin. In fact, you can see the video here. Back then, the cryptocurrency traded at $620.
As I write this now, it’s above $62,000 — a cool 100x return.
And I don’t believe the rally is going to come to an end any time soon. In fact, if you take a close look at Bitcoin, and truly understand its attributes and appeal, there’s only one conclusion to draw: that we’re closer to the beginning of the rally than the end.
The price did take a bit of a hit this week: as I write this, BTC-USD is off about 3% from its highs.
I wouldn’t worry about these short-term moves, however. The long-term case is what matters. For a number of reasons, I still believe that long-term case is taking Bitcoin to six figures before this year is out.
Skepticism Is Good
I know Bitcoin has more than its share of skeptics. That’s not a bad thing. In fact, for the BTC price, it’s actually a good thing.
Some level of skepticism makes sense. Bitcoin’s design is unquestionably brilliant. But its role in the financial system isn’t necessarily intuitive.
A share of stock, for instance, makes concrete sense. The company makes money — or, at least, investors believe it will make money at some point in the future. It returns some of that money to shareholders — or, again, investors believe it will do so at some point.
Obviously, there’s disagreement over how much money, and when. That’s what makes a market. But broadly speaking, equity investing has a firm, simple logic.
Investing in cryptocurrency isn’t quite the same thing. Bitcoin doesn’t pay a dividend. It’s not going to pay a dividend. For equity investors, Bitcoin and other cryptos are confusing.
It bears repeating: this is a good thing.
After all, there is an enormous pool of potential buyers who aren’t yet actual buyers. Technically speaking, that’s a help. Popular investments can run out of buyers at a certain point. Bitcoin won’t have that problem.
Meanwhile, think about the investors who already own Bitcoin. They’re not going anywhere.
That’s not to say that every current owner of Bitcoin will never sell. Obviously, that’s not true.
Rather, the point is that investors who already understand the value of Bitcoin aren’t going to suddenly change their minds. Meanwhile, every day more and more investors will “get it.”
In other words, demand rises. The coin’s brilliant design limits the growth of supply. The combination means a higher Bitcoin price.
Rising Bitcoin Adoption
It’s not just investors that are going to drive Bitcoin higher. We’re seeing enterprises rapidly adopt the cryptocurrency as well.
Multiple companies now hold Bitcoin in their treasury accounts. That’s a big deal. Corporate treasurers typically focus only on cash and short-term instruments that are as safe as cash. Adding Bitcoin to the menu too adds another source of rising demand.
And we’re now seeing many of those companies accept Bitcoin as payment as well. Eleven years after a programmer paid 10,000 BTC for two pizzas, consumers can buy all sorts of products and services.
One company is even paying its board of directors in Bitcoin.
Bitcoin is not what it was last decade, when only a few tech-savvy individuals really saw its potential. It has been normalized. It has been accepted.
And once that proverbial bridge is crossed, there’s no going back.
Now, an investor could agree with all this and still question whether Bitcoin could get to $100,000 by the end of the year. But I see a strong case on that front, too.
All that really needs to happen is for the current trend to hold. BTC-USD has more than doubled so far this year in three and a half months. Even slower appreciation gets the roughly 60% needed to hit the six figure level.
And what breaks the trend? I don’t see it. Adoption is rising faster than supply. For any investment — for anything at all, really — that means a higher price.
That’s why Bitcoin has rallied so sharply since 2014. And it’s why the rally is far from over.
On the date of publication, Matt McCall held a position in Bitcoin. McCall did not hold (either directly or indirectly) any other positions in the securities mentioned in the article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in the article.
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