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The Ultimate Cryptocurrency to Buy With $1,000 Today
Bitcoin (CRYPTO: BTC) has experienced dramatic fluctuations over the past three years. The world’s leading cryptocurrency soared to $69,000 in November 2021, plummeted below $16,000 a year later, and then skyrocketed to a record high of $73,750 in March. As of this writing, Bitcoin’s price has retraced to about $64,000.
These volatile price swings might deter smaller retail investors from considering Bitcoin as an investment. However, with just $1,000, investors can still purchase fractional Bitcoins or shares of Bitcoin exchange-traded funds (ETFs). Let’s delve into the primary factors influencing Bitcoin’s price volatility and why investing at least $1,000 in the cryptocurrency remains a prudent decision.
What Transpired with Bitcoin Over the Past Three Years?
In 2021, a confluence of factors, including stimulus checks, the rising popularity of commission-free trading platforms like Robinhood Markets, social media hype, and a fear of missing out (FOMO), fueled a buying frenzy in meme stocks and cryptocurrencies. Additionally, low-interest rates facilitated the development of speculative cryptocurrency projects.
However, in 2022, inflation prompted the Federal Reserve to aggressively raise its benchmark interest rates to their highest levels in over two decades. These abrupt rate hikes steered investors toward more conservative investments, initiating a “crypto winter” that dampened the market’s appetite for Bitcoin and other cryptocurrencies.
Despite this, Bitcoin’s price stabilized and more than doubled over the past 12 months, driven by three key tailwinds. Firstly, the U.S. Securities and Exchange Commission (SEC) sanctioned the first 11 spot price Bitcoin ETFs in January. These approvals significantly simplified Bitcoin investment for retail and institutional investors, with the six largest spot price ETFs currently amassing a combined $58 billion in assets under management. Hong Kong’s Securities and Futures Commission (SFC) is also reportedly on the verge of approving the region’s inaugural spot price ETFs for Bitcoin and Ethereum.
Secondly, bullish sentiment grew around Bitcoin’s upcoming “halving,” which slashes the rewards for mining Bitcoin in half every four years. The next halving is expected around April 19 or 20, and the diminished supply should stabilize Bitcoin’s market price.
Lastly, if inflation subsides, the Fed could reduce interest rates this year. In such a scenario, investors might pivot back to Bitcoin and other cryptocurrencies. Lower rates could also weaken the robust dollar, boosting Bitcoin’s value in U.S. dollars.
What Could Cause Bitcoin’s Price to Remain Volatile in 2024?
Despite these long-term catalysts potentially propelling Bitcoin to new highs. The cryptocurrency could encounter unforeseen headwinds throughout the remainder of the year.
Federal Reserve Chairman Jerome Powell recently cautioned about a “lack of further progress” in achieving a 2% inflation rate. This grim assessment indicates that the Fed is not eager to lower interest rates yet. Potentially leading investors to shy away from Bitcoin and other cryptocurrencies as long as rates remain elevated.
Moreover, many of Bitcoin’s catalysts, such as ETF approvals, institutional acquisitions, and the halving, might already be factored into its price. Consequently, a lack of immediate tailwinds could cause Bitcoin’s price to stagnate or decline this year.
Why Should Investors Consider Investing $1,000 in Bitcoin Today?
Despite these near-term challenges, I believe it remains wise to invest $1,000 in Bitcoin or a Bitcoin ETF and hold onto your investment for several decades. During this period, inflation is likely to erode the value of the U.S. dollar. Other fiat currencies, while assets like Bitcoin, gold, and silver could maintain or increase their value.
As Bitcoin’s price stabilizes, more businesses are expected to accept it as a payment method. Its ability to bypass unfavorable foreign exchange rates could make it an attractive option for cross-border commerce. Additionally, countries grappling with severe inflation may emulate El Salvador and adopt Bitcoin as a national currency.
In summary, a $1,000 investment in Bitcoin today could yield life-changing returns in a few decades. However, this potential can only be realized if you overlook its short-term fluctuations.
