Throughout much of its past,
Bitcoin
(CRYPTO: BTC)
It has long been regarded as the quintessential ‘risk-on’ asset. Known for its high volatility, it often experiences dramatic booms and busts. Numerous investors and experts advise steering clear from including any small portion of Bitcoin in one’s investment portfolio because of its erratic risk-return characteristics.
However, an intriguing development occurred this year. As global tariff uncertainties continue, discussions surrounding them have intensified.
Bitcoin
turning into the premier refuge asset. To put it briefly, Bitcoin appears to have shifted rapidly from being a “risk on” asset to a “risk off” asset. Now, let’s delve deeper into what this might imply for your investment strategy.
Where should you put your $1,000 investment at this moment?
Our analysis team has just disclosed their insights into what they consider to be the top choices.
10 best stocks
to buy right now.
Continue »
Bitcoin’s unique characteristics
Bitcoin is worldwide, digital, decentralized, and not tied to any particular country or government. Its issuance of new coins is regulated by a specific algorithm, which cannot be altered by any central banking institution or national authority.
Furthermore, the maximum lifetime supply of Bitcoin is set at 21 million coins, with approximately 20 million currently circulating. This built-in scarcity intensifies every four years during theBitcoin halving event.
halving event
This algorithm-driven occurrence is essentially disinflationary as it reduces the pace at which new Bitcoins enter circulation by half.
For over ten years, cryptocurrency advocates have maintained that due to its properties, Bitcoin ought to be regarded as “digital gold.” This viewpoint is now gradually becoming accepted widely. Upon examining various Bitcoin valuation methods employed by leading institutional investors, one frequently encounters a benchmark measure that incorporates the idea of Bitcoin being akin to digital gold.
For instance, in their present Bitcoin valuation model, Ark Investment employs a measure referred to as Digital Gold. This factor considers the overall market capitalization.
physical gold
, and subsequently estimates a “penetration rate” for Bitcoin. In its optimistic scenario, this penetration rate reaches up to 60%.
Bitcoin’s track record
Should you indeed consider assigning a portion of your investment portfolio to Bitcoin currently as a safeguard amidst economic and geopolitical instability? Based on past trends, the response to this query would be affirmative.
Last September,
BlackRock
analyzed the reaction of both gold and Bitcoin to multiple disruptions within the worldwide financial framework. The disturbances encompassed conflicts such as wars, health crises like pandemics, along with various political upheavals and economic downturns. BlackRock particularly investigated their performance during these events in both brief time frames and extended periods.
The outcomes may astonish you. Out of the six cases studied by BlackRock, Bitcoin surpassed gold in five instances over an extended period. While gold tends to excel in the immediate future, Bitcoin gradually closes the performance discrepancy with time.
This might be what we’re witnessing currently. Once the fresh tariffs came into play, numerous investors instinctively shifted their funds towards gold. Consequently, the cost of gold has surged throughout this year. However, keep an eye on Bitcoin: In just the last thirty days, Bitcoin’s value has climbed by 25%, indicating that the difference in performance compared to gold seems to be diminishing.
What might be the effect on the price of Bitcoin?
The truly thrilling aspect lies in understanding how alterations in investors’ perspectives might influence Bitcoin’s prospective growth opportunities. A widely used method to gauge this involves comparing Bitcoin’s overall valuation with that of gold, which many consider the traditional “store of value” asset. By estimating what portion of this established store-of-value market Bitcoin could secure over time, one can speculate on its future expansion potential.
Let’s break down the numbers. The overall worth of the global gold market is thought to be around $20 trillion. Assuming Bitcoin captures half of this “store of value” segment, we apply a multiplier of 0.5 to estimate Bitcoin’s potential valuation at approximately $10 trillion. Dividing this figure by the current circulating supply of roughly 20 million Bitcoins gives us a projected price point of about $500,000 per coin.
Certainly, there’s no assurance that Bitcoin will reach such an extraordinarily high price point, and the timeframe for this could stretch out considerably. However, a price target of $500,000 may turn out to be conservative. Numerous predictions indicate that Bitcoin has the potential to soar to $1 million by 2030. Indeed, Ark Invest currently believes Bitcoin could climb as high as $2.4 million, largely driven by the idea of it becoming digital gold.
Should the present tariffs deteriorate further and funds keep shifting away from assets valued in dollars, a portion of those funds will likely be redirected towards Bitcoin. Consequently, through an unexpected mechanism, uncertainties surrounding tariffs could potentially elevate Bitcoin’s prices throughout this year. This digital currency is gradually achieving its anticipated role as a safeguard against financial hazards linked with markets denominated in U.S. dollars.
Is it advisable to put $1,000 into Bitcoin at this moment?
Before purchasing Bitcoin stocks, keep this in mind:
The
Motley Fool Stock Advisor
The analyst team has just pinpointed what they think could be the
10 best stocks
For investors looking to purchase now…Bitcoin was not among them. The 10 stocks selected have the potential to generate substantial gains over the next few years.
Consider when
Netflix
created this list on December 17, 2004… should you have invested $1,000 following our suggestion,
you’d have $598,613
!*
Or when
Nvidia
created this list on April 15, 2005… should you have invested $1,000 following our suggestion,
you’d have $753,878
!*
Now, it’s worth noting
Stock Advisor
’s total average return is 922% — a market-crushing outperformance compared to
169%
For the S&P 500 index. Make sure not to miss the most recent top 10 list, which becomes accessible upon joining.
Stock Advisor
.
Check out the 10 stocks here »
*Stock Advisor returns updated as of May 12, 2025
Dominic Basulto
The Motley Fool holds stakes in Bitcoin. They also endorse buying Bitcoin. Additionally, The Motley Fool has a
disclosure policy
.