Bitcoin: A Durable Choice for Long-Term Investment

• Future Outlook on Bitcoin
• When to Invest in Bitcoin?
• Reasons to Believe in Bitcoin's Appreciation
• Reducing International Trust
• Bitcoin as a Trustless Alternative
• Replacing the Dollar in International Finance

Future Outlook on Bitcoin

It can be predicted that in the upcoming years, the value of bitcoin will appreciate. This belief stems from an anticipated increase in bitcoin demand, for two key reasons: Bitcoin$42,260 -0.64% becoming a global reserve currency, providing a borderless and neutral alternative to national currencies, and the U.S. dollar's depreciation due to an unsustainable U.S debt overhang. It is believed that investors will turn to bitcoin as a non-inflationary asset.

When to Invest in Bitcoin?

There are two primary situations that call for investing in bitcoin: When there is a belief that bitcoin's value will appreciate over time, and when one believes they might require access to bitcoin's unique capabilities in the future. It isn't necessary to be certain about these points, as investing revolves around probabilities, expected value, and uncertainties. It isn't required to invest all or none of one's money. For the majority, a small allocation to bitcoin would be sensible.

To determine if bitcoin is a suitable investment, one must understand their expectations for bitcoin's future price movement and the potential utilities derived from owning it. Hundreds of millions of individuals globally have decided that bitcoin is suitable for them. Each of these individuals likely anticipates the appreciation of bitcoin over time or believes they will require bitcoin's unique features at some point.

Reasons to Believe in Bitcoin's Appreciation

In the coming years, various triggers could potentially drive up bitcoin's price. These include the halving of bitcoin production rate in April 2024, increased inflows to bitcoin ETFs as major Wall Street players begin marketing their products, and increased demand due to the continuous wealth transfer to the younger generation, who are more inclined to invest in bitcoin. While these triggers can explain changes in demand given the existing demand, they would not provide a sustainable value for bitcoin if other drivers were absent. If this were the case, critics would be correct in labelling bitcoin as a financial bubble.

However, the fundamental value derived from bitcoin's unique properties reinforces the long-term investment thesis. Bitcoin has the potential to become a significant asset in the global financial system's infrastructure, driving substantial investor demand, and pushing its valuation up to several hundred thousand dollars per unit.

Reducing International Trust

The world is moving towards a multipolar, fragmented international political settlement. In this new world of balanced, competing geopolitical interests, there is a global need for seizure-resistant assets like gold. This context provides the foundation for bitcoin's rise as a global payment medium.

Bitcoin as a Trustless Alternative

Bitcoin, an uncontrolled digital bearer asset with intrinsic value, can be traded globally against every currency and stored and transferred digitally at almost no cost. This attribute allows for efficient and seamless cross-border transactions, a feat unachievable with traditional national currencies or bank money.

Replacing the Dollar in International Finance

While the U.S. dollar has served as the world's reserve currency for decades, concern is growing over the U.S. using its currency as a political weapon. Coupled with an increasing U.S. debt, this makes the dollar less attractive to investors, who are beginning to see bitcoin as a more appealing alternative.

Edited by Jonathan Stoker