By Peter Eberle, President & Chief Investment Officer — Castle Funds
Digital finance is a relatively new and ever-evolving space, and within this space, Bitcoin remains the subject of many predictions and speculation. With some recently noted market fluctuations, many have wondered if Bitcoin is maintaining its position as a wise investment.
While the cyclical nature of the markets is nothing new, Bitcoin’s downturn has concerned some investors. However, many savvy investors know that the waxing and waning of the markets can create unique opportunities as well, such as an accumulation of assets and market corrections, and that Bitcoin’s enduring qualities allow it to hold value in a market that is constantly in flux.
Here, we delve into what will happen with Bitcoin in 2024 and why it’s still a great investment option.
Bitcoin in 2024
Bitcoin has been a solid player in digital finance since its debut in 2009 as the first cryptocurrency, and it arguably remains the most well-known to this day. Its 15-year history has been a study of the digital market’s ups and downs. After leading cryptocurrency exchange FTX declared bankruptcy in 2022, many feared Bitcoin was dead.
Nevertheless, Bitcoin has continued to maintain its position as a power player in the cryptocurrency space throughout 2024. For instance, in March of this year, Bitcoin set a new intraday trading record as it broke through the $69,000 level, topping out at $73,000 before declining.
However, what goes up must often come down, particularly in the financial sector. On August 5, Bitcoin was trading below $50,000.
This wild fluctuation in value may have given some investors pause, especially as the fluctuations were accompanied by new regulatory developments and broader economic uncertainty. In January of 2024, the SEC approved eleven new spot Bitcoin ETFs, which came with backing from financial giants such as Blackrock and increased legitimacy for Bitcoin as a whole. While the excitement surrounding the new spot Bitcoin ETFs led to a boost in pricing, the excitement seemed to quickly wane, and prices dropped.
Bitcoin’s performance in 2024 has been primarily defined by a maturing digital market, increased regulation by global financial institutions, and the expected ups and downs that accompany most markets, digital or traditional.
Why Bitcoin is still a good bet
Despite market fluctuations, there are still numerous reasons to consider investing in Bitcoin. One of its most attractive features, decentralization, remains intact.
Unlike traditional currencies, Bitcoin’s peer-to-peer network is largely still resistant to government censorship and inflation. The structure of Bitcoin transactions ensures security and transparency, which many investors consider the currency’s most positive attribute.
Bitcoin’s finite supply is also appealing. It is capped at 21 million coins, using scarcity to its advantage. Like precious metals such as gold or silver, Bitcoin has a store of value due to its scarcity. Although demand will continue to climb, its availability will remain static, allowing the value of Bitcoin to rise. As more institutions adopt Bitcoin and legitimize its use, the value of the digital currency is only set to increase.
Additionally, Bitcoin has seen increased adoption by several well-known companies and institutions, such as Square and PayPal. These adoptions lend credibility to the currency, reinforcing its legitimacy among investors.
Bitcoin’s volatility is also attractive to investors concerned about the risks of relying on a very small number of stocks (such as the “Magnificent Seven” technology companies) to provide the bulk of their investment returns.
Inflation has caused concern in recent years as it has reached record highs. Despite price fluctuations, Bitcoin remains a hedge against inflation — so much so that many have called it “digital gold.” Many have turned to Bitcoin investment to protect their wealth amid uncertain economic times.
Finally, the increased regulations associated with the new spot Bitcoin ETFs have given investors a perception of increased security in the digital investment environment. As governments and financial institutions continue to create better frameworks around cryptocurrency, the risk of fraud and market manipulation goes down.
Bitcoin carries many unique characteristics that make it a safe bet. The decentralized, secure nature of the digital currency continues to make it appealing for investors seeking non-traditional investment options. Markets, both digital and traditional, will continue to fluctuate — it is the nature of the investment landscape.
As more people turn to Bitcoin as an investment option, the fluctuations in price will simply be considered par for the financial course. The future of Bitcoin investing remains bright, with continued opportunities for people who are looking for investment options with almost limitless potential and resilience.
– Peter Eberle, President and CIO of Castle Funds. Castle Funds is an investment firm that has been managing funds invested in Bitcoin and other digital currencies since 2017. Castle Funds offers secure, liquid, and low-cost access to Bitcoin and other digital currencies. They manage active portfolios across spot, futures, and options markets. Castle Funds also develops their own software systems that handle all aspects of their fund operations.
