Each day, more and more people start investing in cryptocurrencies like Bitcoin (CRYPTO: BTC). It's not hard to understand why. Over the past decade, the S&P 500 has risen roughly 278% in value. Bitcoin's value, meanwhile, has soared by more than 17,000% over the same time period.
If you want to add huge growth potential to your portfolio by betting on crypto, there's only one ETF that most investors need.
đ¶There's a reason why Bitcoin is so famous
When talking about Bitcoin six years ago, legendary investor Peter Thiel summarized the investment pitch for the cryptocurrency: "Money is the bubble that never pops." Consider the U.S. dollar. It holds value because everyone believes that it holds value. There are some backstop forms of value such as military might and the power of taxation. But in general, currencies like the U.S. dollar -- or even stores of value like gold -- have value because we all agree that they have value.
When it comes to investing, the rule is typically to find opportunities that will create hard value in the form of distributable cash flows or real world profits. Betting on what other people think the stock will be worth can be a dicey game. That's why most experts build complex models and analyze financials to determine whether the price they are paying for an investment will be worth the eventual reward.
Currency -- or more colloquially, "money" -- is the exception to this rule. Dollar bills don't produce more dollar bills. That's not where their value stems from. Their value, on a core level, is as a social instrument. We all agree that it represents the value of whatever work was put into earning it. Bitcoin operates in very much the same way. It's considered a proof-of-work cryptocurrency, meaning miners are continually working -- in this case, they're solving complex mathematical problems -- to produce more Bitcoins. And while it doesn't have much direct functionality besides as a form of money, it's the first time a form of money has been created that doesn't involve major nation states or other centralized powers.
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Of course, a bunch of other things are happening in the crypto universe as well. And it's possible that crypto in general enters our daily life in ways we never expected, just as the internet continues to do. But regardless of whether those ventures are successful, Bitcoin will always "work." That is, it will always retain its ability to act as a form of money and a store of value.
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Due to these factors, most everyday investors only need one ETF to gain exposure to cryptocurrencies: the iShares Bitcoin Trust ETF (NASDAQ: IBIT).
A widely-tracked momentum indicator has flipped bullish for the first time since April.
A similar bullish flip happened at the onset of the late 2023 rally and in late 2022, marking the end of a brutal downtrend.
A bitcoin {{BTC}} indicator that warned of seller exhaustion in early September has flipped bullish, bolstering the case for a move above $70,000.
The moving average convergence divergence (MACD) histogram, a technical analysis indicator used to gauge trend strength and changes, has flipped positive on the weekly chart for the first time since April, according to charting platform TradingView. It signifies a renewed upward shift in momentum, implying a bullish resolution to bitcoin's prolonged back and forth trading between $50,000 and $70,000.
The positive technical outlook is consistent with consensus that the Fed's renewed bias for rate cuts, growing probability of supposedly pro-crypto Republican candidate Donald Trump winning the Nov. 5 U.S. election, and weakness in the anti-risk Japanese yen, will likely power bitcoin to at least $100,000 by the end of December.
The MACD is calculated by subtracting bitcoin's average price level during the past 26 periods (weeks in this case) from the average over the past 12 weeks. The signal line is then calculated as a nine-week average of the MACD and the difference between the MACD and signal lines is plotted as a histogram.
It's one of the widely tracked indicators out there, and how it moved relative to the cryptocurrency's price in the first half of September signaled downtrend exhaustion.
Bitcoin has risen nearly 30% since hitting lows under $53,000 in early September. The leading cryptocurrency by market value rose to $69,500 during Monday's Asian trading hours.
The MACD's latest bullish signal follows a similar flash from the "line break chart" last week and suggests that bulls might finally succeed in establishing a foothold above the $70,000 mark, having failed to do so several times since the first quarter.
A similar MACD bull cross happened in October last year as bitcoin moved past the long-held $30,000 resistance, eventually reaching a record high of over $73,000 in March this year. The bull cross seen in late 2022 marked the bear market bottom.
