Bitcoin
(CRYPTO: BTC)
has increased by approximately 25% just over the past 30 days. The likelihood of this trend continuing upwards is strong, driven primarily by an unmistakable factor that supports this trajectory.
Without further delay, here’s why the remainder of 2025 is likely to be an excellent period for investors.
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Investors’ feelings play a crucial role.
We all examine the performance of our investments. Brokerage sites and apps simplify tracking how well your preferred stocks or cryptocurrencies fare compared to what you initially paid. Gains are indicated in green, with losses shown in red.
The urge to offload one of your investments becomes stronger when your overall returns are negative. On the flip side, it’s quite simple to keep holding onto an asset when it’s clear that your so-called “genius” strategy is at play.
investment thesis
As illustrated by solid growth, things seem to be unfolding positively. Just like many others, you likely check the price graph of your holdings periodically, regardless of whether they show a profit or a loss. Charts showing an upward trend can boost your confidence, suggesting that future earnings may keep increasing. Conversely, descending lines often intensify your fear that further losses might occur, which could lead you to sell off your assets prematurely.
Ignoring the flawed approach of making buying, holding, or selling decisions based solely on short-term pricing movements, it’s clear that investors often act emotionally and struggle to stick to a long-term strategy during periods of financial stress. Conversely, when many holders of an asset see gains instead of losses, remarkable events may unfold — which is precisely what we’re witnessing with Bitcoin currently.
According to data provided by Glassnode as of May 5, with each Bitcoin priced at $95,000, approximately 88% of all Bitcoin wallets held coins at a profit instead of a loss. This significant factor suggests potential for further increases in value.
The cost of the coin presently exceeds $103,000. Most Bitcoin owners are experiencing no psychological urge to liquidate their assets at a loss. Consequently, they have a much higher probability of retaining and increasing their holdings rather than offloading them.
This will keep pushing the cryptocurrency’s price up further in the near future, even without considering the additional significant factors contributing to its value.
Be aware that this principle cuts both ways
It is very unlikely that the price of Bitcoin will trend upward forever solely on the basis of most holders having an unrealized profit this month. There will probably be some macroeconomic events that are able to crack the market’s bullish
sentiment
, causing some investors to sell. In other words, Bitcoin is destined to experience a crash or a sharp fall at some point in the future, and it is very likely that the decline will be so sharp that many investors sell their holdings at a loss and swear off cryptocurrencies altogether.
This does not undermine the overarching strategy of investing in and keeping hold of Bitcoin over time. However, it’s an undeniable truth that financial assets experience periods of popularity followed by phases of decline.
The approach to handling this situation involves having a strategy for investing when the asset is performing well as well as when it’s going through tough periods.
Dollar-cost averaging (DCA)
with small amounts of capital when the market is practically euphoric about Bitcoin, like now, is a way to make sure you won’t get wiped out to the point of feeling bad if there’s a decline. At the same time, keeping some of your capital in reserve to
buy the dips
in the coin’s price is also a good idea because doing so will enable you to capture upside when other investors are panicking.
The main foundation of this dual-pronged approach is to keep your cryptocurrency holdings for an extended period, ideally around four years, though a duration closer to 40 years would be even better. The longer you consistently acquire Bitcoin, the greater benefit you’ll reap due to its increasing scarcity and factors such as institutional and government acceptance over time. By separating your investment behavior from emotional impulses, it becomes irrelevant whether other investors are profiting or losing money with their Bitcoins; you will continue harnessing its potential to create wealth continuously.
Is it wise to put $1,000 into Bitcoin at this moment?
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Alex Carchidi
The Motley Fool holds stakes in Bitcoin. They also endorse buying Bitcoin. Additionally, The Motley Fool discloses their involvement with Bitcoin.
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