2024 has been a year of impressive highs and disheartening lows for Bitcoin. The crypto king has served us some memorable moments, starting with the long-fought and much-awaited approval of the first-ever spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission in January and ending with a post-election bull run that propelled it to a new record high of $108,268 in December. But in between reaching new milestones and hitting records, the main crypto also had some severe slumps, such as the one that started in early July, when the Bitcoin price USD prediction dropped below $60K.
According to recent data, Bitcoin has recovered since then and seems to sustain an upward trend. Yet the effects of the slide are still noticeable as some have grown reluctant to invest in Bitcoin, turning their focus towards other investment options.
However, resorting to such a drastic approach might be unwarranted. Every time Bitcoin goes through a rough patch or falls short of investors’ expectations, crypto opponents are quick to declare its upcoming demise, but that never happens. For better or for worse, Bitcoin remains the most popular digital currency in the market, and despite its inconsistent performance, it still shines the brightest of all.
The original crypto has always rewarded those who don’t abandon ship when the waters get murky. Therefore, this might be as good an opportunity as any to practice patience and wait for Bitcoin’s revival.
A History Of Resilience And Rise
Probably the strongest argument in favor of Hodling Bitcoin or not looking past it when assessing investment options is its past performance. As the first digital currency, Bitcoin has been around longer than any other crypto, and that says a lot for a market that has gotten us accustomed to dramatic fluctuations and unexpected twists and turns.
No other crypto project – and many have emerged in the meantime – has managed to equal or even come close to Bitcoin’s achievements.
Looking at its current standing, we can see that Bitcoin’s value is 10% below its all-time high. This decline would be absolutely terrible for different types of assets, such as stocks or bonds. But this is Bitcoin, and a 10% drop doesn’t mean much. If we go back in time and analyze Bitcoin’s evolution from its launch in 2009 to the present day, we can see that it has been through a lot worse and somehow managed to emerge victorious after each bear market it has experienced.
In 2011, just a few years after its birth, Bitcoin went from $2 to $32, only to lose almost 99% of its gains in a single day in the aftermath of the famous Mr. Gox hack. The following year, a Ponzi scheme involving Bitcoin caused its price to slump by 56%. In 2013, Mt Gox was once again the cause of Bitcoin’s woes, as the exchange platform crashed and sent the coin’s price tumbling down by 83%.
The string of sharp rises and declines continued into more recent years, with losses of 84% registered between 2017 and 2018. The latest of these falloffs happened during the crypto winter of 2022 when Bitcoin plummeted by 77%. This proves that resounding crashes are part of Bitcoin’s DNA. Therefore, by crypto standards, the dips in Bitcoin’s price chart this year are relatively insignificant.
Bitcoin bear markets have varied in length and intensity, but the one thing that all these periods of waning have in common is that Bitcoin recovered and came back stronger afterward. This highlights Bitcoin’s potential as a long-term investment. So, if investors had sold off their Bitcoin holdings every time the crypto went red in the charts, they wouldn’t have benefited from any of the major bull runs that followed, and that turned many of them into billionaires.
Let’s not forget that Bitcoin’s year-to-date gains stand at 59% at the time of writing. This means that Bitcoin has had a pretty solid run this year so far, and if we were to listen to expert predictions, the best is yet to come.
It’s true that one can’t base forecasts on past performances alone, especially in a volatile market like crypto. Still, it can’t be ignored that Bitcoin has performed better than any other asset class out there since its inception, with an average annual return of 230%, establishing itself as a legitimate and powerful financial instrument.
Advances in crypto regulations and increasing interest in Bitcoin from traditional financial institutions only reinforce its credibility and cement its status as a major player in the financial arena.
How Much Should You Invest In Bitcoin?
Given Bitcoin’s proven strength and promising prospects, one might wonder how much of their portfolio they should reserve for the leading crypto. First of all, aspiring crypto investors need to realize that diving into digital assets can be a tricky business that involves plenty of risks. Therefore, this is a very personal decision that one should take after careful consideration and in-depth research. So, you shouldn’t let yourself be influenced by Bitcoin’s enduring appeal and rising popularity. You need to dig deeper and educate yourself on crypto so you can figure out if investing in this asset class makes sense to you.
Then, if you decide that investing in Bitcoin is indeed a good idea, you should determine how much you should allocate to this endeavor. In general, experts recommend putting no more than 5% of your entire portfolio into crypto as a way to manage volatility and limit risks. The rest of your portfolio should be made of a diverse range of assets that can protect you from losses.
However, these are just general guidelines, and you should take your specific circumstances into account when making this decision. This can mean investing more or less, based on your financial situation. The best measure here is investing as much as you’re comfortable with, or better said, as much as you can afford to lose. And always keep in mind there are no guarantees in crypto investing.
