Investors like to speculate about the future potential of their assets. In addition, they also like to say “it would have been, could have been, should have been” about the investments they made. No investment vehicle in the last decade has created such retrospective regret as cryptocurrencies. The most important of these cryptocurrencies is undoubtedly Bitcoin (BTC). Bitcoin is probably the crypto that most evokes feelings of belatedness among investors who want to buy early. This feeling of being late is normal. However, the inherent characteristics of Bitcoin are conducive to providing investors with multiple opportunities to buy. So how?
Scarcity increases value
Thanks to Bitcoin’s programming, the growth in the supply of the cryptocurrency is slowing over time. There are about 19 million Bitcoins in circulation today, out of the 21 million predefined. Only 2 million or more Bitcoins will be created in the next 118 years. The price of BTC has the potential to continually rise as supply and demand dynamics unfold. The primary mechanism that ensures the scarcity of Bitcoin is known as halving. As we’ve reported on cryptokoin.com, Bitcoin’s code was written roughly every four years to halve the reward of mining a Bitcoin. Initially the block reward was 50 bitcoins, but today the reward is 6.25 bitcoins.
The next halving will likely occur in May 2024, reducing the block reward to just 3,125 Bitcoins. Thus, the process will continue until 2140, when the last Bitcoin is scheduled to be mined. And when that day comes, I predict investors will look back over and over and think, “If I had invested in Bitcoin at this time, I would have had this amount of money now”. But whether you invested in Bitcoin at an all-time high last year or invested 10 years ago, one thing remains true: The longer you hold it, the more likely you are to reap the rewards.
Numbers don’t lie
Data serve as evidence. So let’s have some fun and see how much $100 would have been if you had invested in Bitcoin during its first halving. At that time, the price of Bitcoin was $12. When the next halving took place in July 2016, your $100 investment would have been over $5,000 while Bitcoin was worth $665. Now, let’s say you kept your $100 investment until the most recent halving, which happened on May 11, 2020. At that time, Bitcoin was worth about $8,800. The same $100 investment would now be worth more than $70,000. That’s an incredible 75,000 percent increase.
Although we know and should never try to time a market, if you had sold $100 at the top of the market in November 2021, your $100 investment would have reached an almost inconceivable $575,000. If you take a closer look at Bitcoin’s payoff around halving events, another pattern should become clear. The returns generated are significantly less than the previous halving period.
It’s not too late to invest in Bitcoin
These numbers can cause some FOMO (fear of missing out). Still, the Bitcoin price may continue to repeat its past price movements. If this is going to happen, there is no better time than now to buy Bitcoin. However, if you want to maximize your potential, you can wait for at least one Bitcoin halving.
So, if you bought at the top in November 2021, when Bitcoin was worth almost $69,000, then you’re disappointed in 2022. You can hold your investment until May 2024 and use this time to add while prices are low. Eventually, one day, your current belief will become the envy of those in the future.
