In typical fashion, Bitcoin (CRYPTO: BTC) has been on a volatile journey in 2024. After soaring about 60% through the first three months of the year, it has traded in a relatively tight range since. As of Sept. 26, the world's top digital asset sits 11% below its all-time high from March.
The bulls are hoping that Bitcoin can break out and get back to producing monster returns. Should you buy this cryptocurrency while it's trading for less than $70,000?
Focussing on the short term
This year has been full of catalysts for Bitcoin. In January, the highly anticipated spot Bitcoin exchange-traded funds (ETF) were approved. And in total, they have seen $17.8 billion in inflows, making a very successful ETF launch.
And in April, Bitcoin underwent a "halving," which is when the number of new tokens entering the market gets cut in half. This event happens roughly every four years, and in the year or so after, the crypto usually experiences a bull run. It's not clear yet if that will be the case this time.
Another catalyst that can work in Bitcoin's favour is what the Federal Reserve does. Earlier this month, the central bank cut interest rates for the first time in over four years, which investors hope is the start of a more accommodating stance.
You might be wondering what the connection is between lower interest rates and Bitcoin. There isn't a direct relationship. but when rates are lower, it incentivizes investors to take on more risk in order to generate better returns. Cash sitting in savings accounts will earn less after the interest rate drops, so it makes sense to buy riskier assets, such as Bitcoin.
Indeed, when investors view the successful ETF launches, Bitcoin's latest halving, and the prospect of more rates cuts by the central bank, it's difficult not to be bullish about this cryptocurrency.
Thinking about the long term
I believe it's smart to buy Bitcoin while it trades below $70,000. However, don't plan to only hold it for a few months or a year. This is an asset that requires a very long-term mentality from investors. That's because anything can happen in a short period of time, as investor sentiment is constantly shifting, and it will take several years and even decades to know Bitcoin's ultimate outcome.
But this cryptocurrency certainly has value. Its creation more than a decade ago marked the first time that money could be transferred electronically without the need for an intermediary. Citizens in developed countries might not think much of it, but for people living in emerging economies, Bitcoin provides access to the financial system.