Inflation led by the devaluation of the dollar could prevent many investors from selling their assets, including Bitcoin. Given that we've seen bitcoin's fiat price double several times over the past decade, it seems reasonable to expect it to double at least once more in the future. So the most important question that comes to mind after observing these mind-blowing predictions is whether it is possible for Bitcoin to move violently towards any of the goals mentioned above. This leaves Bitcoin with investors and companies that have excess cash in their treasures and that have been looking to deploy them into easily liquefiable assets.
Bitcoin has gone through multiple cycles of hype over the past decade, and there are still more than a million cryptocurrency accounts using Bitcoin every day. And it's not hard to imagine a scenario in which more countries follow in El Salvador's footsteps to establish Bitcoin as a legal tender. I am optimistic about the entire crypto economy, so making the decision to allocate a small portion (1% to 2%) of a well-diversified portfolio to Bitcoin seems like a no-brainer to me. One day we can say that assets are worth 100 Satoshis (small fractions of Bitcoin), rather than dollars as a unit of account.
It's not because, as advocates often claim, it's “inevitable that Bitcoin will become the world's next reserve currency, dethroning the US dollar. In addition, companies like Block, PayPal Holdings, and Coinbase Global have made it incredibly easy to gain exposure to Bitcoin. Your company's goal depends on many things happening, such as more countries accepting Bitcoin as legal tender, greater institutional and corporate ownership, and greater participation in the global remittance market. You may have noticed that I keep saying “value denominated in dollars, since a Bitcoin today is still just a Bitcoin from previous years.
The way this cycle seems to work is that the price hits new all-time highs for several months, then plummets to half the price as the hype cycle corrects itself and skeptical newbies, lured by the promise of risk-free riches, collect money. Anyone who bought Bitcoin and held it for at least four years witnessed a surprisingly high appreciation, no matter what price they bought it at. Unsurprisingly, the main cryptocurrency, Bitcoin (BTC -2.04%), has attracted a lot of attention as digital assets move toward widespread adoption. In addition, large organizations, including governments, institutional investors, and corporations, could choose to convert some of their cash holdings to Bitcoin.