Is Bitcoin a good buy now?

Bitcoin has once again made waves in the financial world by nearing all-time highs. The question on many investors’ minds is whether now is the right time to consider adding this volatile cryptocurrency to their portfolios.

In the world of investing, narratives play a crucial role in shaping market movements. The story of a particular asset or market trend can become so compelling that it drives investor sentiment and influences market behavior. Bitcoin, in particular, has had its fair share of narratives over the years, ranging from skepticism to adoration.

While recent headlines have been dominated by stories about stocks, bonds, and trade wars, Bitcoin has been quietly making a comeback. After surging in 2024 due to the launch of US spot bitcoin ETFs in January, the cryptocurrency crossed the US$100,000 mark following Trump’s election victory. However, subsequent developments, such as Trump’s pivot towards his own cryptocurrency and underwhelming executive orders, caused Bitcoin to lose momentum and take a backseat to broader market concerns. After a period of consolidation, the cryptocurrency is once again approaching its previous all-time high of US$106,000.

According to Jamie Hannah, deputy head of investments at VanEck, several factors could explain Bitcoin’s recent resurgence. He points to the strengthening narrative around sovereign assets, the expansion of bitcoin investment products, and renewed risk appetite in the market. While Bitcoin has a reputation for extreme volatility, data suggests that it has become less speculative over time and has started to behave more like a mature, lower-beta asset. This evolution has positioned Bitcoin as a potential hedge against macroeconomic uncertainties.

Bridget Nichols, COO at Monochrome Asset Management, sees Bitcoin as a valuable store of value in the current economic landscape. Factors such as persistent inflation, low real interest rates, and currency devaluation make Bitcoin an attractive alternative for preserving wealth. The recent recovery in Bitcoin’s price may also be attributed to the momentum from the previous ‘halving’ event in 2024, which reduced the supply of new bitcoins entering circulation.

Halving events occur approximately every four years and create a supply shock that historically leads to boom-and-bust price cycles in Bitcoin. Nichols believes that if history repeats itself, Bitcoin could see further significant gains. She also highlights the increasing adoption of Bitcoin by traditional financial institutions and the growing popularity of Bitcoin ETFs, indicating strong retail demand for the cryptocurrency.

As the global economy shifts away from the US dollar, Hannah suggests that Bitcoin could see greater adoption as a sovereign, uncorrelated store of value asset. The trend towards de-dollarization could lead individual investors, corporations, and central banks to consider Bitcoin as a viable alternative for international trade.

In conclusion, Bitcoin’s recent price surge has sparked new interest among investors. While the cryptocurrency remains highly volatile and speculative, its evolving narrative as a mature asset and store of value has bolstered its case for inclusion in investment portfolios. As Bitcoin continues to gain traction among mainstream financial institutions and investors, its role as a potential hedge against economic uncertainties is becoming more pronounced.