This Emerging Global Trend Is 1 New Reason to Buy Bitcoin

As if there weren't enough reasons to buy Bitcoin (CRYPTO: BTC) already, a rapidly growing body of evidence suggests there's one huge new trend emerging.

The best news for holders here is that the trend is just getting started, so it could create a lot of demand for quite some time.

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Competition between countries is good news for holders

Bitcoin is already a global phenomenon, and the world's governments know it, which is why a slew of them are opting to hold their coins rather than sell them for a quick buck. That trend is picking up speed, and it could be a big deal for the asset's value over the long term.

The U.S., China, U.K., Ukraine, North Korea, and El Salvador all already hold Bitcoin, and they probably won't be the only countries to build up stockpiles. For at least the first three of those countries, the government accumulated the coins via asset seizures. But that might not be the case forever.

Regulation of the coin is changing in real time, and big policy proposals that would dramatically influence its price are under consideration worldwide.

China's government may be building a reserve of Bitcoin even as it remains illegal in China to trade or mine, following in the footsteps of plans for a Strategic Bitcoin Reserve (SBR) in the U.S. Russia is in the process of evaluating whether to create a similar repository after loosening certain regulations. The Czech Republic is also studying whether such a reserve might be useful or feasible, and there are yet more countries taking similar actions.

If just a few of the countries looking to hold Bitcoin end up doing so, it will contribute to the coin's scarcity.

Governments that stockpile assets typically do not sell them, and they might even opt to buy them to make sure their reserves are adequate. Therefore there could soon be a lot more big Bitcoin buyers competing for the same limited pool of available coins, driving the price higher and higher. And because a coin held by one player can't be held by another, there's an incentive for major buyers to get their purchasing done as quickly as they can, because in the longer term, prices are more likely to be higher than lower.

Only buy if you're willing to hold for long enough to make it matter

Investors should recognize that countries can and will stockpile a lot of Bitcoin without necessarily needing to buy it at market prices. Some may also opt to buy it on top of what they gather via asset forfeitures. But the main part of the story here is that they're going to want to retain their existing supply rather than sell it.

That means the positive catalyst the national Bitcoin reserves will have on the coin's price will take some time to play out. The more patient you are with your investment, the more likely you are to get a good return because Bitcoin's halving cycle occurs roughly once every four years, reducing the growth rate in the supply of news coins. Of course, there's still a possibility that major new buyers will come rolling in if a rich country decides that it simply can't do without having a lot of Bitcoin in a jiffy, but it isn't very likely.

Lock in and plan to hold your coins for at least five or six years, and preferably for a decade or two. The longer your timeline, the more you'll benefit from the more restrictive supply environment created by countries retaining their coins, assuming the trend picks up speed during the next few years.

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Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.