This is the year that Bitcoin (BTC +0.42%) was supposed to double in value. It had every possible catalyst going for it, including the full support of a new pro-crypto administration. Yet, with less than 45 days to go in 2025, Bitcoin is actually down for the year.
Of even greater concern, Bitcoin has now fallen through both the $100,000 and $90,000 price levels, potentially setting up an even steeper decline. So, is Bitcoin still a buy, or is now the time to abandon ship?
If you're a short-term investor...
Gold is up 55% for the year and is outperforming Bitcoin, which is now down 6% for the year. If Bitcoin is indeed "digital gold," as many cryptocurrency investors claim, then it should closely track the price of physical gold. But it's not. One asset is going up in value, while the other is going down in value, so you can no longer make the argument that the price of Bitcoin is simply lagging the price of gold.
Image source: Getty Images.
Just about any argument that you could possibly make for Bitcoin right now, you can also make for gold. So, if you still buy into the logic of the "debasement trade" (in which investors swap out of fiat currencies and into precious metals), save yourself the heartache and misery of watching "digital gold" fall in price, and just buy gold. If you don't want to buy physical gold bars, then do what everyone else does: Buy gold ETFs.
If you're a long-term investor...
However, for long-term buy-and-hold investors, Bitcoin remains a buy. The historical track record of the world's most popular cryptocurrency is impossible to ignore. Bitcoin has only had three down years since 2010. In every other year, it has delivered double- and even triple-digit growth.
Remember, Bitcoin has always been a highly cyclical asset. It typically experiences four-year boom-and-bust cycles. Due to the impact of the Bitcoin halving, which occurs every four years, several years of price appreciation are typically followed by a year of significant decline. So, after Bitcoin soared by 157% in 2023 and 125% in 2024, it now appears to be headed for one of those challenging years.
CRYPTO: BTC
Key Data Points
But I'm not worried quite yet. Long-time crypto investors understand the inherent volatility of Bitcoin and its tendency to produce "bust" years with alarming regularity. Whether or not you believe in the Bitcoin four-year cycle, you do have to admit that it's rather coincidental that the three major drawdowns of Bitcoin -- in 2014, 2018, and 2022 -- have all taken place exactly four years apart.
The good news is that JPMorgan Chase still believes Bitcoin can reach $170,000 within the next 12 months, based on the rapid pace of institutional adoption. Wall Street banks and top financial institutions are still embracing Bitcoin, and the White House has shown no signs of giving up on its Bitcoin ambitions. The plan is still to make the United States a "Bitcoin superpower."
The optimal holding period for Bitcoin is five years
At the end of the day, Bitcoin should still be on your investment radar. In eight of the past 10 years, it has been the top-performing asset in the world. It has routinely trounced the returns of gold, tech stocks, and just about any other asset class you can imagine.
However, here's the key point: You need to commit to holding Bitcoin for at least five years. According to Cathie Wood of Ark Invest, that's the minimum holding period required for Bitcoin, given its boom-and-bust behavior. If you don't hold for the full five years, you might get wiped out by Bitcoin's recurring drawdowns.
If you're not prepared to buy Bitcoin and hold it for five years, gold may be a better investment right now. However, if you can see the big picture and are willing to be a patient, long-term buy-and-hold investor, then Bitcoin still makes sense as a high-upside investment at this time.
