Should You Buy Bitcoin While It's Under $95,000?

After hitting an all-time high of $109,000 in January, Bitcoin (CRYPTO: BTC) has exhibited a downward trend. Perhaps the uncertainty characterizing the economic backdrop has led investors to avoid what they view as riskier assets. By April 9, Bitcoin was trading 25% below its peak.

But the situation appears to be improving. As of the early afternoon on April 24, the world's most valuable cryptocurrency has jumped 23% in the past 15 days. The market is becoming more optimistic now.

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Should you buy Bitcoin while its price is under $95,000, when it's about 10% below its all-time high? A closer look at this unique asset will lead investors in the right direction.

Extend the time horizon

President Donald Trump has rattled the market and economy with drastic measures to fundamentally alter trade policy. No one is sure how things will play out. This unfavorable setup makes things extremely difficult for management teams that are trying to assess the right corporate strategy.

Naturally, investors want to position their portfolios accordingly. Gold, viewed as the leading safe haven asset, has gotten a boost. Its price has surged in the past year. And it trades near record levels these days.

Perhaps it's time to look at Bitcoin in the same light. However, it's critical that investors focus on long-term trends, not short-term market gyrations. Investing is all about raising one's purchasing power over time, as opposed to constantly shifting your portfolio due to macro concerns.

In the past decade, Bitcoin's price has rocketed 41,290%. This means that a $1,000 investment used to buy the top cryptocurrency in late April 2015 would be worth a staggering $414,000 today. No one in their right mind would argue with this kind of life-changing outcome.

Gold, on the other hand, is up less than 200% during that same period of time. While the precious metal is having its time to shine right now, the digital asset has been the clear winner.

Will Bitcoin continue to rise?

Bitcoin today is a $1.9 trillion asset. It's understandable why some investors would think that they totally missed the boat. Is it too late to buy Bitcoin? That's a reasonable question to ponder.

To be clear, I don't think it's too late by any stretch of the imagination.

That's because global liquidity, as measured by M2 money supply (of the four largest fiat currencies), has expanded by 80% in the past decade. Due to huge government debt burdens, there's no end in sight to this trajectory. For example, the U.S. currently has $37 trillion of debt, which has doubled in the last 10 years. This pumps more money into the economy.

With the underlying driver of global liquidity increasing over time, it's obvious Bitcoin still has a significant runway. Its price performance is tied to growing money supply. More money flooding the system wants to find its way to an asset that has a fixed supply. It's anyone's guess how high the price can ultimately go, though.

If Bitcoin can reach gold's market cap of $22.4 trillion, there is roughly 12-fold upside. This might prove to be a conservative outlook, however. Gold has the advantage because of how long it's been relevant as a store of value for thousands of years.

But Bitcoin has superior qualities. It's scarcer, divisible up to eight decimal places, more portable, and can be used in transactions. Furthermore, in a world that's only going to become more driven by technology in the future, Bitcoin has the upper hand because it's completely digital.

Buying Bitcoin below $95,000 is a smart move. A decade or two from now, your initial investment could be worth substantially more.

Should you invest $1,000 in Bitcoin right now?

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.