Bitcoin Notches Another All-Time High, But Is It Still a Buy Today?

In case you missed it, Bitcoin (CRYPTO: BTC) has been on an absolute tear. Following the recent U.S. election that saw pro-crypto candidate Donald Trump win the presidency, Bitcoin has surged over 30% since election night, recently surpassing $90,000.

The cryptocurrency's performance has undoubtedly caught the attention of seasoned investors and newcomers alike. But with Bitcoin at such highs, it's only natural to ask: Is it still a good buy today?

Conventional wisdom says that buying at all-time highs is risky business. But there are two compelling reasons -- one short-term and one long-term -- that suggest Bitcoin could still be a strong buy.

Image source: Getty Images.

Bitcoin's short-term potential is still there

At first glance, Bitcoin's climb to $90,000 might suggest that the rally has ended, leaving latecomers feeling they've missed out. However, this isn't the case.

An often-overlooked indicator, funding rates for Bitcoin perpetual futures, tells a different story. This may seem like a technical detail, but understanding funding rates can help investors gauge the sustainability of Bitcoin's current rally.

Funding rates are periodic fees exchanged between traders holding long (buy) and short (sell) positions in futures markets. Their purpose is to keep the futures contract price close to Bitcoin's actual spot price.

When the funding rate is positive, long positions pay a fee to short positions, indicating a higher demand to bet on price increases. Conversely, a negative rate means short positions pay longs, suggesting bearish sentiment dominates.

Elevated funding rates typically indicate a highly leveraged market, where many traders are taking out long positions with borrowed funds. Historically, Bitcoin's price has seen local peaks when funding rates surge, as these leveraged positions become susceptible to liquidations during any price correction.

$BTC futures funding rates are the lowest we've ever seen during a break of the previous all time high.

This is going to get insane. pic.twitter.com/Fa4NX1z4PW

-- Dylan LeClair 🟠 (@DylanLeClair_) Nov. 11, 2024

However, as you can see in the chart above, this isn't the case today. Data shows that even with Bitcoin reaching $90,000, funding rates remain low, suggesting that the recent price increase is not driven by excess leverage. Instead, the rally seems to be fueled by organic buying rather than speculative trading.

This healthy market structure is a positive signal. A rally led by genuine demand, not leverage, leaves room for additional price growth, with less risk of a rapid correction triggered by a wave of liquidations. To put it simply, Bitcoin's current price action indicates it has a stable foundation for continued gains, and that its climb to $90,000 was only a sign of things to come.

Understanding the long-term investment appeal

When it comes to the long-term potential of Bitcoin, the appeal goes far beyond its recent price action. As the most decentralized, secure, and finite digital asset, Bitcoin is unique in the world of investments.

Its scarcity and resistance to manipulation set it apart as a "digital gold" in a financial landscape where certainty is increasingly hard to come by. As global economic instability and inflation worries persist, Bitcoin's built-in scarcity -- capped forever at 21 million coins -- positions it as a hedge against the ever-growing supply of fiat currencies.

Furthermore, Bitcoin's decentralized design makes it immune to the kind of centralized control that plagues traditional financial systems. Unlike government-issued currencies, which are prone to devaluation through excessive printing, Bitcoin's value isn't at the mercy of policy decisions or inflationary pressures.

Instead, its value proposition is grounded in a reliable supply limit and its open, secure network. This makes Bitcoin not only an inflation-resistant store of value, but also a tool for economic autonomy, providing people with a way to preserve wealth independently of the conventional financial system.

Amid growing global debt and a system increasingly dependent on intervention, Bitcoin's attributes offer a kind of financial sovereignty, an escape from the fragility of centralized systems.

As these qualities become more widely recognized, demand grows, as evidenced by Bitcoin's recent rally. However, this momentum may only be a sign of what's ahead. As adoption spreads, institutions increase their involvement, and regulatory clarity improves, Bitcoin's core strengths will likely gain even more traction.

MicroStrategy (NASDAQ: MSTR) CEO and Bitcoin advocate Michael Saylor captured this best when he said: "I'll be buying the top forever." His statement captures the essence of what Bitcoin has to offer. It isn't about chasing short-term gains; it's about preserving value in a superior asset for the long haul.

Ultimately, while Bitcoin may offer potential for short-term profits, it has historically rewarded patient, long-term investors. Over time, as more people come to recognize these enduring qualities, Bitcoin's long-term growth potential remains unlike any other asset on the market today.

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RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.