In a typical way, Bitcoin (Cryptocurrency: BTC) Rise again from the ashes. Having recently hit a new all-time high of over $69,000, the harsh crypto winter that lasted most of 2022 is now just a distant memory.
Despite doubling in just over four months, there is still every reason to believe that Bitcoin (and cryptocurrencies in general) has not yet peaked and presents a valuable opportunity for investors. . Here are three short-term and long-term reasons why I would buy Bitcoin for $10,000 today.
Future half-life
The most immediate and obvious reason why Bitcoin is worth a $10,000 investment today is the upcoming halving. Approximately every four years, 210,000 blocks are added to the blockchain, reducing the Bitcoin reward for mining new coins by half.
There have been three halvings so far, with the fourth halving scheduled for mid-to-late April. This halving is particularly unique as it will cause Bitcoin's inflation rate to fall below 1% for the first time.
Halvings effectively increase the scarcity of Bitcoin, which has historically led to higher prices. During the year that the halving occurred, Bitcoin rose an average of 125%. If a similar situation unfolds this year, the price of Bitcoin could reach around $99,000.
Although past performance is not indicative of future results, it is difficult to ignore the impact of the halving on Bitcoin price. Because the halving slows down the rate at which Bitcoin is produced, the price has to rise to compensate for the decrease in supply, even if demand remains constant.
The perfect hedge against inflation
Next, we'll discuss more long-term reasons to invest in Bitcoin. There will be another halving this year, but this is just one of many planned. These halvings form the basis of Bitcoin's strong monetary policy and will last until 2140, when the last Bitcoin is finally mined.
With the supply of Bitcoin limited to just 21 million coins and inflation rates falling, Bitcoin has emerged as an effective hedge against inflation. And as the value of the dollar continues to decline, it is likely to become even more capable of fulfilling this role over time.
It can get a little complicated, but while inflation has dominated the headlines in recent years, it's not necessarily a new phenomenon. It is well known that policymakers and officials deliberately inflate fiat currencies such as the US dollar in the name of stimulating the economy. I would like to leave it to experts to decide whether this is necessary for economic growth.
But what is more clear is that inflation reduces the purchasing power of currency holders and almost certainly causes the dollar to lose value over time. Even if inflation were maintained at the 2% target, holders of these fiat currencies would see their purchasing power cut in half in just 35 years.
In this respect, Bitcoin is the antithesis of fiat currency. Every dollar stored in Bitcoin is virtually immune to central bank or government manipulation. Not only is it protected, but its inflation rate continues to decrease with each halving, and the supply is limited to 21 million, so the value stored in Bitcoin should increase over time. is.
real cryptocurrency
Bitcoin is better than the dollar in some ways, but it's also better than almost every other cryptocurrency. Although many new cryptocurrencies parade features that Bitcoin does not offer, such as the ability to purchase non-fungible tokens (NFTs) or participate in decentralized finance (DeFi) activities, None of this is enough when it comes to decentralization and security.
In terms of security, Bitcoin's vast global network is estimated to be 500 times more powerful than the best supercomputers. Simply put, the Bitcoin blockchain is virtually impenetrable and unhackable.
In addition to security, Bitcoin is also the most decentralized blockchain network. Analysts believe there are approximately 57,000 nodes maintaining the Bitcoin network scattered around the world. Unlike other cryptocurrencies, which have a high concentration of potential points of failure, Bitcoin is the epitome of a truly decentralized network.
Therefore, it not only has properties that make it the ultimate hedge against inflation, but also the two most important aspects that contribute to the value and long-term viability of cryptocurrencies. Investors can rest easy knowing that any value stored in Bitcoin is protected within the most secure and decentralized blockchain ever invented.
Should you invest $1,000 in Bitcoin right now?
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RJ Fulton has a position in Bitcoin. The Motley Fool has a position in and recommends Bitcoin. The Motley Fool has a disclosure policy.
3 Reasons to Buy Bitcoin With $10,000 was originally published by The Motley Fool.
