Should You Buy Bitcoin While It’s Below $18,000?

The Bitcoin (BTC 5.00%) Cryptocurrency is much cheaper than it used to be. Bitcoin prices have remained below $18,000 for more than a month at this point. Is this a good time to buy Bitcoins on the cheap?

A brief overview of recent Bitcoin history

Once upon a time, about 13 months ago, Bitcoin’s price reached $68,790. The cryptocurrency had more than quadrupled in value in 12 short months. The sky was the limit. The crypto market as a whole was worth more than $3 trillion. Six-figure prices seemed to be coming up soon. Life was good for cryptocurrency holders.

But the market took a different turn at that point, and November 10, 2021 turned out to be the peak of the particular Bitcoin bull market. The Omicron variant of COVID-19 was about to turn the economy upside down again. Rampant inflation was next on the menu, along with the Russian attack on Ukraine and a global disruption of long-haul shipping services.

At first glance, none of these things look like they would lead to lower Bitcoin and other cryptocurrencies. If anything, Bitcoin should be an effective hedge against inflation. If the dollar in your wallet loses value over time, an entirely separate monetary system that has nothing to do with national banks and political agendas should remain stable, increasing its value against the dollar.

Unfortunately, many investors rejected that idea in the turbulent market of 2022, hoarding cryptocurrencies along with unprofitable growth stocks and other high-risk investments instead. In this time of economic crisis, these risky bets were mostly carried out in 2022.

To make matters worse, the crypto sector brought additional risks to the party. Stablecoins lost their unshakable footing. Crypto lenders could not cover the sky-high interest rates they had promised investors. One of the largest crypto exchanges in the world collapsed and filed for bankruptcy protection.

All of these issues weighed on Bitcoin over the past year. All told, the biggest and oldest name in crypto is down to $17,100. That’s down 75% from its brief moment in record sunshine 13 months ago.

Image source: Getty Images.

Is the Bitcoin community planning something big?

Bitcoin has no game-changing plans right now. The code tree has no pending or planned changes. The node developer mailing list is full of housekeeping notes, which address minor issues but don’t exactly push Bitcoin in new directions.

Remember the capacity scaling projects of leading altcoins in recent months, which Ethereum Merge or Cardano Vasil? These forks made fundamental changes to how each cryptocurrency works, setting up Ethereum and Cardano for faster processing, lower power consumption, and reduced transaction fees.

Bitcoin developers are planning nothing of the sort.

A few minor upgrades and bug fixes are bubbling under the surface, but everyday Bitcoin users and investors probably won’t notice them. You don’t change a winning team. People have tried to make significant changes to Bitcoin’s central platform over the years, creating so-called hard forks such as Bitcoin Cash and Bitcoin gold, but the offshoots never really challenged the original Bitcoin currency. Any attempt to make further changes is likely to result in another largely forgotten hard fork, while the original Bitcoin continues to tick as before.

A vocal minority suggests that Bitcoin should follow Ethereum’s example and replace the power-intensive proof-of-work (PoW) system with a lightweight alternative such as proof of stake (PoS). However, traditionalists argue that this change will undermine Bitcoin’s security model. It requires a massive investment in mining hardware and electrical power to take control of the Bitcoin blockchain through a 51% attack. PoS systems can’t match the basic security feature, so I expect PoW and Bitcoin mining will be around until someone comes up with a better hacking idea.

Sure, pick up some Bitcoin while it’s cheap (but not too much)

Bitcoin was not only first out of the gate, but it also came with a fundamentally robust platform. It is easy to understand and work with. In the 14 years since Bitcoin’s original whitepaper, no one has come up with a significantly better model for decentralized and secure financial transactions on a global scale.

I cannot guarantee that Bitcoin will fill this role forever, so I do not recommend converting all your money into Bitcoin tokens. But there is an undeniable long-term upside to this revolutionary system of digital transactions and value storage. Micro strategy Chairman Michael Saylor believes that Bitcoin will replace gold as a long-term store of value, which could bring prices up to at least $500,000 per coin over the next decade. ARK Investment Management CEO Cathie Wood sees Bitcoin topping the million-dollar mark by 2030. If they’re within a couple zip codes of the right ballpark, Bitcoin at $17,000 will look like a huge flashing neon “buy” sign in hindsight .

There is a significant chance that Bitcoin investors buy today for less than $20,000 per token will be worth many times that much within eight to 10 years. There’s also less risk of something going wrong on the way to that station, and Bitcoin never takes the investment-grade throne from gold. If so, you’ll be glad you didn’t literally bet the farm on this overrated opportunity.

So the sensible thing to do is to treat Bitcoin like any other investment. Buy some if you believe in the long-term growth story, but limit yourself to a regular entry – just like any other stock, bond or mutual fund in your properly diversified portfolio.

And I’m not here to sell you on Bitcoin. If you prefer to stick with the more traditional investments that have served you well so far, that’s fine too. Only you know what is best for your own investment strategy, and Bitcoin is just one of many options out there.