I've already made 158% on Bitcoin. Here's why I keep holding

The top cryptocurrency remains an important part of my portfolio.

| More on:
Man sitting at desk with hands folded

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

I first purchased Bitcoin (CRYPTO: BTC) on April 24, 2020, when the price of one token was roughly $7,509. This means that my position has generated a return of 158% (as of Oct. 13) in about two and a half years. That's impressive any way you look at it, and that figure has far outpaced popular stocks like Apple and Costco Wholesale

Even with such an outstanding investment gain, especially when compared to the S&P 500's total return of 34% during the same period, I have no intention of selling my Bitcoin holdings anytime soon. Here's why. 

Not a good time for risky assets 

After hitting an all-time high of nearly $69,000 per token last November, Bitcoin has fallen 72%. This has followed the general negative trajectory of the overall stock market as well. 

Inflation started to surge more than a year ago, and it hasn't abated. This has forced the Federal Reserve to hike interest rates to slow down rising prices across the US economy. Investors have soured on risky assets in favor of safer ones, and this shift has hurt Bitcoin and the cryptocurrency market as a whole.  

Tightening liquidity, coupled with a softening economic environment, might pave the way for a recession in the near future. Consequently, this could mean even more downward pressure on Bitcoin in the foreseeable future. 

Maybe I would've looked smart in hindsight had I exited my Bitcoin position at its peak in November last year, but it's difficult to correctly time the market on a consistent basis or call the exact top. And sitting on a paper gain of 158% right now might encourage one to sell and take the profits. But this is not my approach. 

Keep a long-term mindset 

Despite its price decline, Bitcoin has still generated an incredible return of nearly 14,000% since the spring of 2013. And to be clear, I remain extremely bullish on the world's most valuable cryptocurrency over the next decade. This is why I remain a holder. 

Bitcoin is being viewed by a growing number of market participants as a legitimate store of value, the equivalent of digital gold. But Bitcoin is more divisible, useful, and portable than gold. And these key characteristics could propel the cryptocurrency's current market cap of $371 billion, bringing it closer to the $12.5 trillion total value of gold worldwide. Supporting my argument here is the younger generations' increasing familiarity with and appreciation of all things digital, a trend that will only strengthen. 

Large corporations, like Block and MicroStrategy, have allocated portions of their balance sheets to Bitcoin. And big-time institutional investors are getting in, too. Ark Invest, the investment firm headed by Cathie Wood, is extremely bullish on Bitcoin. Additionally, Coinbase recently signed a partnership with BlackRock, giving the massive asset manager's clients easy access to Bitcoin. Rising investor demand, especially for a digitally scarce asset like Bitcoin, helps to support a higher price over time. 

I know the path to greater Bitcoin adoption will be full of extreme volatility, just as it has been in the past. But as long as I maintain a very long-term time horizon, as I do with my entire portfolio, then I have no doubt that I'll be able to maintain my conviction and remain a Bitcoin holder.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Neil Patel has positions in Apple, Bitcoin, Block, Inc., and Coinbase Global, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Bitcoin, Block, Inc., Coinbase Global, Inc., and Costco Wholesale. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

Smiling man working on his laptop.
International Stock News

Which 'other' US AI stock is soaring this week?

This US AI stock is following Nvidia's footsteps in more than one way.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
International Stock News

Warren Buffett meets AI: Is Berkshire Hathaway prepared for technological disruption?

Berkshire Hathaway's portfolio may contain underappreciated AI-associated risks.

Read more »

A man looking at his laptop and thinking.
International Stock News

Nvidia stock is still a great buy — but when should investors sell shares?

Here are three solid reasons for investors to consider selling shares of the artificial intelligence (AI) chip leader.

Read more »

Three exuberant runners dash towards the camera. One raises her arms in triumph; another jumps in the air with arms raised. The third runner gives a satisfied smile.
International Stock News

Why Tesla stock jumped today

Tesla investors seem to want to keep CEO Elon Musk happy.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Prediction: This will be Nvidia's next big move

The GPU leader's next big growth catalyst isn't being talked about much by investors -- yet.

Read more »

streaming stocks represented by woman watching tv on tablet
International Stock News

Why Apple stock popped (again) Wednesday morning

Wall Street is increasingly bullish on the iPhone maker's plans for artificial intelligence (AI).

Read more »

Boral share price divestment Banknote ripped in half
International Stock News

Is Nvidia stock a buy after the 10-for-1 stock split?

Shares in this artificial intelligence titan have become significantly cheaper, but its massive market cap remains the same.

Read more »

Woman relaxing and using her Apple device
International Stock News

Why Apple stock popped Tuesday morning

Wall Street is bullish on the iPhone-maker's plans for artificial intelligence (AI).

Read more »