Bitcoin Surpasses $100,000: Is It Still Worth Buying?

It has finally occurred. Bitcoin (BTC) has broken through the significant milestone of $100,000, a remarkable achievement considering it first surpassed the $1 mark just 14 years ago. This new high marks an extraordinary journey for the cryptocurrency.

This momentous occasion comes during a period of nearly a 50% increase in Bitcoin's value since the start of last month. While multiple factors have likely contributed to this surge, a notable trigger seems to be the recent election of Donald Trump. The incoming administration has indicated a positive approach towards cryptocurrencies, promising to position America as the "crypto capital of the planet."

Trump's choice of Paul Atkins to lead the Securities and Exchange Commission suggests a significant shift from the previous administration, a shift that many in the industry view positively.

As anyone who keeps an eye on Bitcoin knows, the emotions surrounding this asset can be quite volatile. As of December 6, Bitcoin's price has seen a slight pullback below the $100,000 threshold. History does not guarantee future performance, and it raises the question: with Bitcoin reaching new heights, is it a good time to invest?

Influence of ETFs and Institutional Interest

The optimism surrounding Trump's administration is far from the sole reason for Bitcoin's impressive performance. In January, the SEC's approval of spot Bitcoin ETFs opened the market to a broader range of investors, lending legitimacy to Bitcoin. These ETFs allow investors to buy and sell Bitcoin similar to traditional stocks, making them more accessible to those not familiar with cryptocurrency exchanges.

The endorsement from a key regulatory body has likely shifted perceptions, enabling funds from those previously hesitant to invest in Bitcoin. This approval has also spurred institutional investment in the crypto space, further legitimizing the market. With these institutions entering the market, Bitcoin's liquidity has improved, aligning its price more closely with what many consider its true value.

However, individual investment in Bitcoin remains relatively low. Less than 15% of American adults hold digital assets, while around two-thirds own stocks. Additionally, around 63% of U.S. adults still express doubts about the safety of cryptocurrencies. Although these numbers have improved, cryptocurrencies have yet to become mainstream. The entry of institutional investors is crucial for Bitcoin's future growth.

Evaluating the Right Time to Invest

Warren Buffett famously advised investors to be "fearful when others are greedy and greedy when others are fearful." Currently, with Bitcoin nearing $100,000 and having risen 150% from earlier in the year, it appears that greed may be at play. Some might argue that now is the moment to be cautious. However, considering that two-thirds of Americans still express fear towards crypto, it raises the question of whether this presents an opportunity to be more aggressive in investing.

Your investment strategy should largely depend on your risk tolerance. Attempting to predict market timing can lead to difficulties. The truth is, purchasing at an all-time high isn't necessarily disastrous – provided you don't panic sell during significant downturns. The critical aspect is to hold through corrections. Many who entered the market at a peak in 2021 may regret their choice if they sold during the 2022 downturn, leading to losses as high as 75%. Yet, had they held onto their investments, they would now be seeing positive returns.

If you can withstand potential losses and avoid the temptation to sell during downturns, entering the market now, even at its current peak, may not be a bad idea.

Bitcoin, Investment, Market