To understand whether it is worth investing in cryptocurrency for the long term, you need to pay attention to:
Features of the nature of cryptocurrency.
Demand for cryptocurrencies.
Potential for the development of the digital assets market.
Long-term investment strategy is embedded in the Bitcoin code
To understand that cryptocurrency is a good investment for the long term, just look at the statistics on the movement of the market flagship - Bitcoin - over the years. Even against the backdrop of a significant drop during the crypto winter of 2022, all investors who invested in cryptocurrency more than two years ago remain in the black.
Now let’s figure out why Bitcoin is growing in general, the movements of which are being repeated by other participants in the digital asset market.
There is a theory according to which the behavior of BTC is cyclical. The cryptocurrency code contains a reduction in the mining speed (the release of new coins) - halving. The event occurs approximately once every 4 years. Halving reduces the BTC mining speed by exactly 2 times. As a result, the rate of influx of new coins into the market is reduced by half, approximately every 4 years.
Bitcoin emission is limited. A total of 21 million coins will be mined. As of the time of writing this review, over 19.2 million BTC have already been mined. The graph shows how, against the backdrop of a slowdown in the rate of influx of new coins (blue curve), the cryptocurrency rate is growing. Here's why this happens:
The popularity of cryptocurrencies continues to grow. This is indicated by the results of various studies. For example, in December 2022, JPMorgan analysts found that between 2020 and 2022, the number of Americans who bought cryptocurrency at least once grew from 3% to 13%.
The rise in popularity of BTC is accompanied by a decrease in the supply of coins on the market due to halvings. The changes create a shortage of bitcoins, which pushes the cryptocurrency rate up.
Thus, halvings trigger Bitcoin cycles, which, as the history of cryptocurrency behavior shows, largely repeat each other. For example, in every cycle there is a cryptowinter - a period of prolonged falling prices in the digital asset market.
On the chart you can see that after each halving, Bitcoin updates its maximum. There is reason to believe that the next decrease in BTC mining speed will once again help the coin update its ATH.
There are over 300 days until the next halving, which means there is time to prepare for the bullrun.
Many large companies see the potential for long-term investment in cryptocurrency. Here is a list of the top 10 largest Bitcoin investors among public companies:
Interesting! Many large players are not afraid of either the crypto winter or the collapse of FTX. For example, in December 2022, the financial conglomerate Goldman Sachs announced an increase in investments in the crypto industry.
The head of the digital assets department at Goldman Sachs, Matthew McDermott, clarified that the bank is conducting a due diligence procedure in relation to “several crypto firms.” He did not disclose details. The FTX crisis had increased the need for more reliable, regulated service providers, and big banks saw prospects for more business, he said.
“We do see some really interesting opportunities at a much more reasonable price point,” McDermott said.
Goldman Sachs has already invested in 11 crypto companies, including CertiK, One River Digital, Elwood Technologies, Blockdaemon and Coin Metrics.
Conclusions: It turns out that Bitcoin is programmed to grow in the long term. And where BTC goes, so does the entire digital asset market. Therefore, we can assume that after the crypto-winter there will be a bull run again, which will help the coin to update its absolute maximum.
But we’ll look at the potential of the digital asset market in the next part.
