Top Reasons to Hold Bitcoin
The price has corrected significantly
Bitcoin is currently trading at a discount of nearly 66% from its all-time high. While this fall might seem like a crash for majority of assets classes, it is just another routine correction when it comes to cryptocurrencies. A general rule of thumb investors adhere to is the buying-the-dip methodology where an asset is accumulated during its correction. So given the distance from the peak for Bitcoin’s price currently, experts believe that its price has higher chances to find a support somewhere around the current levels, representing a buying opportunity.
Institutional Adoption
When Bitcoin was first launched, all market participants were highly skeptical about its adoption. But slowly and gradually, people are now accepting the innovation and utilizing it for their own operational requirements. In fact, many investment firms and funds now have a portfolio dedicated primarily to cryptocurrencies, majority of which have Bitcoin as the most heavily weighted constituent. This adds a lot of attention and reliability to the crypto’s name as retail investors generally act upon the advisory of these firms.
Lightning network success
The Bitcoin network can process nearly 4.6 transactions per second. While this might be slower compared to the likes of Visa, it does get ahead when it comes to the transaction costs involved. As per blockchain.com, the average fees per transaction (in USD) for Bitcoin currently is approximately $1.43, while the same for Visa can go as high as 3.55% of the transaction amount + a $0.10 flat fee. This has led to a considerable migration of users to the crypto platform for transaction facilitation.
Bitcoin has store value
The maximum supply of Bitcoin is fixed at 21 million coins. This means that beyond this point, Bitcoin will provide store value given its limited supply. To understand this better, take the example of gold, which obviously has a limited supply available. In order to store the value of fiat money, investors generally invest their money in gold, which in turn preserves value against factors like inflation. Experts believe that Bitcoin as an investment borrows some of its behavior from gold, having similar characteristics like limited supply and store value, and so many also call it “digital gold.”
The halving cycle makes bitcoin scarce
Let’s first understand what does the halving cycle mean. In order to mine Bitcoin, the miners solve complex computer equations. For solving such equations successfully, they are rewarded with blocks of Bitcoin, and each block contains a fixed amount of bitcoin (6.25 BTC per block currently.) For every 210,000th block mined, the number of bitcoins awarded per block gets halved. So by the next halving cycle (predicted to take place in 2024), miners would only get 3.25 BTC per block, reducing the supply of Bitcoin in the market. And as the basic laws of economics suggest, lower supply, with even stable demand (if not higher,) leads to a higher price.
The bitcoin bull cycle theory
As with any other asset, analysts believe that the price of Bitcoin too moves in cycles. It is said that every Bitcoin bull run is followed by a crypto winter, where the price of the currency falls anywhere between 60-80%, but not significantly breaching the previous cycle high. The same cycle has taken place currently with Bitcoin sustaining the sub-$17,000 levels and bouncing back from there. If this theory is deemed to be correct, then the next bull run might not be far.
Bitcoin is the benchmark for cryptocurrencies
While this might sound ironic, Bitcoin is actually stable relative to the other cryptocurrencies (excluding the currency-pegged stable-coins.) And as it is also the primary crypto, experts often see it as the benchmark for comparison for alternative coins. This adds a lot of trust and following behind its name.
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