Amidst the current global economic instability and fluctuating tariffs, many investors are understandably hesitant to enter the cryptocurrency market. Cryptocurrencies, similar to stocks, have experienced significant downturns, with some digital currencies plunging by as much as 50% this year. However, one cryptocurrency stands out as a potentially wise long-term investment: Bitcoin (BTC). Here’s why it deserves your attention.
Historical Resilience of Bitcoin
One of the most compelling arguments in favor of Bitcoin is its extraordinary ability to recover from setbacks. Over the past 15 years, Bitcoin has navigated through numerous market cycles marked by dramatic highs and lows, earning a reputation for its volatility. Notably, after each major downturn, Bitcoin has rebounded, often surpassing its previous records. Historical patterns indicate that even if the market looks bleak for Bitcoin in 2025, reflecting on past cycles reveals a trend of rapid recovery. Key years to examine include 2014, when Bitcoin fell by 57%; 2018, which saw a 74% decline; and 2022, when it dropped by 64%. Following each of these significant declines, Bitcoin eventually reached new all-time highs. For instance, after hitting a peak of $69,000 in November 2021 and then dropping below $16,000 a year later, Bitcoin surged again, achieving triple-digit percentage returns in 2023 and 2024, culminating in a record high of $109,000 in January. While past performance is not a definitive predictor of future outcomes, Bitcoin’s history suggests a robust capacity for recovery, offering a glimmer of hope amid tariff-induced anxiety.
Bitcoin’s Performance: Peaks and Valleys
A detailed report from WisdomTree in 2024 examined Bitcoin’s performance compared to eight other asset classes from 2012 to 2023. The findings were striking: Bitcoin was the top-performing asset in nine out of those twelve years by a significant margin. Conversely, in the remaining three years—2014, 2018, and 2022—Bitcoin ranked as the worst performer, and by a considerable distance. This erratic performance is reminiscent of a race car driver like Ricky Bobby from the film Talladega Nights, who famously declared, “If you ain’t first, you’re last.” This highlights the inherent risk of investing in Bitcoin; while it can lead to substantial gains in many years, it can also result in dramatic losses during downturns. Currently, Bitcoin is facing challenges as it has dropped nearly 25% from its peak of $109,000 in January, with few indications of a swift recovery.
Long-Term Investment Perspective on Bitcoin
When considering Bitcoin, it’s crucial to adopt a long-term investment strategy. Cathie Wood of Ark Invest emphasizes the importance of holding onto Bitcoin for several years to maximize returns. Viewing Bitcoin as a quick profit opportunity may lead to disappointment. In Ark Invest’s “Big Ideas 2024” report, Wood illustrated that Bitcoin has outshined every major asset class over extended periods. For instance, over a seven-year span, Bitcoin’s average annualized return was an impressive 44%, while other asset classes averaged only about 5.7%. Additionally, the longer one holds Bitcoin, the better the potential returns; an investor retaining Bitcoin for the full seven years could anticipate an average annualized return of approximately 70%, compared to 55% for a four-year holding period.
Bitcoin’s Mainstream Adoption
Finally, Bitcoin’s transition into mainstream finance is a significant factor bolstering its position. The introduction of spot Bitcoin exchange-traded funds (ETFs) in January 2024 played a pivotal role in this shift, making Bitcoin accessible to hedge fund managers, institutional investors, and everyday individuals familiar with ETFs. This newfound ease of access has resulted in over $100 billion flowing into Bitcoin ETFs. Furthermore, there’s potential for even greater mainstream adoption, especially with the current U.S. administration prioritizing cryptocurrency regulation and establishing a Strategic Bitcoin Reserve. Any future purchases of Bitcoin by the U.S. government could have a substantial impact on its market value. Given these developments, Bitcoin may well be positioned as a leading cryptocurrency for long-term investment. However, investors should prepare for the inevitable volatility that accompanies this digital asset.
