Tech
Forget the “magnificent seven” tech stocks. I’m buying Bitcoin for the long haul
Bitcoin’s historical returns have been every bit as mind-blowing as those of the “Magnificent Seven.” Its prospects are even more impressive.
There is no denying that the Technology titles “the magnificent seven”. they’ve been, well, magnificent over the past five years. All have at least doubled in value, and some have tripled, and Nvidia (NVDA -0.79%) increased in value by as much as 1,980%.
But what if I told you? Bitcoin (Bitcoin 0.54%) was equally magnificent in the same period? Over the past five years, Bitcoin’s value has skyrocketed from just under $4,000 to its current price of $65,600. And if you take the last decade into consideration, Bitcoin’s performance has been even more astounding.
Keeping in mind that past performance is no guarantee of future performance, I’m buying more Bitcoin than Magnificent Seven stock these days. Here’s a closer look at why it might finally be time to add Bitcoin to your wallet.
More upside potential ahead
In its “Big Ideas 2024” report, Ark Invest analyzed Bitcoin’s performance compared to all other asset classes over a set of varying maturities, ranging from three to seven years. Bitcoin has outperformed every other asset class. Over seven years, Bitcoin has produced annualized returns of 44%, compared to just 5.7% for the average asset class.
And Bitcoin is likely to continue this trend of outperformance for the foreseeable future. Wall Street analysts, hedge fund managers and portfolio strategists continue to increase their future assessments for Bitcoin. For example, Standard Chartered now predicts that the value of Bitcoin will increase to $250,000 by the end of 2025.
And that forecast could be on the low end. For example, Tom Lee of Fundstrat Global Advisors now expects Bitcoin to reach a price of $500,000 within five years, while Cathie Wood of Ark Invest has doubled her original prediction of $1 million for Bitcoin. In fact, you recently outlined a super bullish scenario in which Bitcoin will skyrocket to $2.3 million by 2030.
Traditional adoption
One of the main reasons for these skyrocketing ratings, of course, was the recent launch of the new one Spot Bitcoin ETF. These new investment products are helping to spur mainstream adoption by making it easier than ever for investors to access Bitcoin.
Before January 2024, to buy Bitcoin you needed basic knowledge of cryptocurrencies, a digital wallet, and an account with a cryptocurrency exchange. This limited its mainstream appeal. Now you can buy Bitcoin as easily as any stock, Magnificent Seven or otherwise.
Image source: Getty Images.
What makes this path to mainstream adoption so exciting is that Bitcoin is finally being recognized as a system in its own right asset class such as stocks, bonds and commodities. This means that investors may decide to increase their Bitcoin allocations to optimize their portfolios.
Fidelity Investments, for example, has already begun to suggest that 1% to 3% of a portfolio should be allocated to Bitcoin. Over time, I expect this percentage to increase.
Growth of Bitcoin use cases
Additionally, the number of Bitcoin use cases continues to grow. Ark Invest has identified eight unique real-world uses for Bitcoin, and each of them is expected to continue to grow in market potential over the next few years. Ark Invest arrived at the $1 million price prediction for Bitcoin using a valuation model that takes into account future growth projections of these use cases.
One of these is the use of Bitcoin – and not gold – as a long-term store of value. As this trend continues globally, it should help push the price of Bitcoin higher. In 2023, Ark Invest suggested that Bitcoin could account for 50% of the store of value market by 2030. And a year before that, Goldman Sachs Group came up with a similar 50% prediction for Bitcoin’s market share.
Bitcoin for the long haul
This isn’t to say you should stop investing in the Magnificent Seven. And I’m not even suggesting that Bitcoin will surpass each of them in the next year or two. It seems like Nvidia is doing so many exciting things with AI that it may have an edge over Bitcoin as a high upside investment for now.
But in the long run, I simply can’t think of a better investment than Bitcoin. As long as Bitcoin continues to gain mainstream adoption, and as long as its existing and potential use cases continue to grow in value, Bitcoin could see huge price gains from here. It may not reach the magical $1 million price point, but I’m highly confident it can continue to outperform the Magnificent Seven.