Now looks like a great time to buy Bitcoin (CRYPTO:BTC). It currently trades at almost 40% below its all-time high, but the optimism coming from institutional investors — a group that is increasingly bullish on BTC– could be translated into 10X gains (or more) in the coming years. Here is what you should know.
The principles of supply and demand
With its release in 2009, BTC has become the first modern crypto. It wowed the entire world with blockchain tech, a record-keeping system managed by a decentralized network of crypto miners rather than a centralized institution such as a bank. To that end, BTC acts like electronic cash, letting people transact digitally without having to use a bank or use a credit card.
However, the importance of BTC’s popularity should not be overlooked. Despite being the oldest crypto, it continues to be the leading crypto, with a market capitalization of around $800 billion. That implies strong demand for the coin, which is noteworthy in light of the limited supply. Specifically, Bitcoin’s source code imposes a hard limit of 21 million coins, meaning it is a finite asset. And basic economics tell us that when demand is higher than supply, the price of an asset will increase.
Despite the recent crypto crash, I do not think the current troubles will hinder long-term demand for BTC. In fact, there is a catalyst at work that might significantly increase demand in the future.
Institutional adoption
A new study from Fidelity shows that 52% of institutional traders own digital assets, and BTC is the most popular digital asset owned by those big money managers. More importantly, the study indicated that 71% of institutional investors have plans to diversify into digital assets. Which means they are starting to become increasingly bullish on crypto.
Another report recently released indicates that 62% of institutional traders without current exposure will buy crypto in the next year, and 82% of institutional traders plan to boost exposure to digital assets by 2023. In all cases, that increasing demand for digital assets will be a tailwind for BTC, driving its price up over the long run.
As a final thought, Cathie Wood thinks institutions will eventually invest 5% of their money into crypto– a sizable number, since institutional traders now have over $100 trillion in assets under management. To that end, Wood thinks the price of BTC will reach $500,000 by 2026, implying an increase of over 1,000% from its current price. That is why now looks like a great time to purchase this cryptocurrency.
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