Cryptocurrencies have become very popular with younger investors. But not all cryptos are alike.
Cryptocurrency has become a mainstay investment for younger investors. According to research by The Motley Fool, roughly 70% of millennials and more than half of Gen Z investors surveyed are at least somewhat likely to own cryptocurrencies. About 75% of crypto buyers view it as an investment, not some quick-money gamble.
However, cryptocurrencies have proven very volatile, which can test even the most unflappable investors.
There are many cryptos, but Bitcoin(BTC 1.68%) remains a top option for long-term investors.
Here’s why Bitcoin could make you a ton of money over the long haul.
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It’s already done it
Cryptocurrencies are a little different from stocks. Stocks represent businesses with intrinsic value, so stock prices are influenced over time by how the underlying business performs. Cryptocurrencies depend solely on supply and demand because they don’t represent anything. Many cryptos serve a purpose that can create demand, but their prices ultimately depend on how much someone is willing to pay for them.
That makes Bitcoin’s long-term performance meaningful. In 2021, there was a bubble due to zero-percent interest rates that artificially increased demand for almost every speculative asset. Most cryptocurrencies haven’t revisited those 2021 highs since the bubble popped in 2022, but Bitcoin has.
Bitcoin Price data by YCharts.
What does this mean? Demand for Bitcoin has grown over time, supporting higher prices. Bitcoin has outperformed the stock market as an investment over the past five and 10 years. A $1,000 investment made a decade ago is worth $118,000 today. Although nobody should assume those returns will continue, Bitcoin’s long-term performance underlines its strong demand, a contrast to most cryptocurrencies.
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Can it keep going?
Bitcoin is an anti-inflationary asset. Miners constantly create new bitcoins, but the pace slows as the supply grows. The ultimate maximum supply is 21 million coins (about 19.8 million now circulate). Limiting the supply supports higher prices as demand for Bitcoin grows.
If demand for Bitcoin rises faster than the supply, Bitcoin’s price should go up.
But that’s not all. Bitcoin’s price is in U.S. dollars, the supply of which is constantly growing. Inflation weakens the dollar, which, all else being equal, can boost Bitcoin’s price. These two factors could push Bitcoin’s price higher over time, though investors fiercely debate Bitcoin’s long-term price target. Ark Invest’s Cathie Wood, for example, has a $3.8 million price target for 2030, though that’s clearly an outlier.
Ultimately, nobody knows Bitcoin’s future price, so it’s best to concentrate on what might drive demand higher. The price will likely follow along.
Should investors buy Bitcoin today?
If there’s one thing you can count on, it’s volatility. You can see below that Bitcoin routinely drops 10%, often falls 30%, and can decline over 60% from its high at times.
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Bitcoin Price data by YCharts.
Remember, Bitcoin doesn’t represent any underlying asset or business, so there are no guardrails per se when wary investors start selling, or greedy investors won’t stop bidding prices up.
Thus, the best investment strategy for Bitcoin is to buy slowly and often, a technique known as dollar-cost averaging. Regularly buying Bitcoin can help you build an investment at various price points, resulting in a blended average in the middle. You won’t buy at the top or the bottom, but you should have plenty of room for investment returns if Bitcoin continues performing anything like it has in the past.
Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
Influential economist and fierce Bitcoin BTC/USD critic Peter Schiff stated that his pessimism about the leading cryptocurrency may be proven wrong if it becomes a mainstream payment medium.
What happened: During a debate with Jack Mallers, CEO of Bitcoin startup Strike, Schiff indicated that broader adoption of Bitcoin as a payment alternative to existing fiat currencies might change his opinion, starting from something as basic as paying for a dinner at a restaurant with the digital coin.
“I can buy insurance policies, and they have Bitcoin benefits. I pay my premiums in Bitcoin. I get my benefits if rents are in Bitcoin. If everything is expressed in a quantity of satoshi, then I guess I was wrong. You were right. Bitcoin actually became money,”
But in the same breath, the naysayer pointed out that the apex cryptocurrency’s aforementioned use case has been gradually diminishing over the past few years, with supporters instead promoting its store of value thesis.
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He added that he doesn’t find Bitcoin “exciting” anymore, despite the possibility of it reaching $100,000 in the future. “If I’m going to speculate, there are better bets to make than betting on a crowded trade like Bitcoin.”
See Also: Bitcoin Miner TeraWulf Leads Early HPC Market Entry, Analyst Projects $610M Revenue By 2026
Why It Matters: One of the most outspoken anti-Bitcoin voices on social media, Schiff has consistently opposed the asset class over the years, arguing that gold is superior to its so-called digital counterpart.
That said, in one of the interviews in March, he wished he bought the the world’s largest digital asset back in 2010, given its profit potential.
Last week, he questioned the business acumen of investors who chose Bitcoin exchange-traded funds over those tracking gold.
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Price Action: At the time of writing, Bitcoin was exchanging hands at $55,116.82, up 1.43% in the last 24 hours, according to data from Benzinga Pro.
Photo Courtesy: Wikimedia Commons
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Two managers of the crypto platform OmegaPro, who were under investigation for billion-dollar fraud, have been arrested in Turkey, according to a Turkish media report. Dutch managing director Robert V. was arrested in Istanbul on Tuesday, following the arrest of Swedish co-founder Andreas S. in July, reports the Telegraaf.
The two executives founded the crypto platform in 2018 and registered it in the Caribbean shortly afterwards. The company was headquartered in Dubai. Their success came quickly, and the company recorded profits of 4 billion dollars within a short period of time.
The two fraudsters’ strategy was to lure investors with very high profits. OmegaPro promised investors returns of “up to 300 percent over a maximum period of 16 months,” according to the newspaper. Thousands of investors then invested in the company.
At the end of February, the French public prosecutor’s office launched an investigation into OmegaPro’s dubious trades. According to the Telegraaf, around 2,000 victims in France have filed charges of fraud and misleading business practices by an organized gang.
Turkish police recently confiscated the two suspects’ computers, mobile devices, and 32 crypto wallets, from which transactions worth more than 160 million euros were traced.
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The Turkish authorities assume that the fraudulent company in the Ponzi scheme was not acting alone but was linked to Ruja Ignatova. The Bulgarian, internationally known as the “Crypto Queen,” founded OneCoin in 2014, which was also investigated for fraud. Since then, she has disappeared without a trace.
It’s hard to beat the growth potential of cryptocurrencies. Ark Invest founder Cathie Wood, for instance, believes that Bitcoin has more than 2,000% in long-term upside. But some stocks have just as much room for growth. If you’re looking for maximum upside, these two stocks are for you.
This AI stock has been a rocket
No list of stocks with massive upside would be complete without a mention of Nvidia(NASDAQ: NVDA). Few investments have ever risen as quickly as the chipmaker. A $1,000 investment made five years ago would already be worth more than $26,000. Yet Wall Street analysts still believe there’s more than 30% in gains to come in the next 12 months. Given that Nvidia’s market cap is now around $2.6 trillion, it can be hard to picture how it would deliver further huge gains in the near term. But there are several reasons for optimism.
The same catalyst that has sent Nvidia stock soaring will not only be in place for the next several decades, but should strengthen significantly over time. In many ways, the story of Nvidia is still very much in its early innings. That’s because the company’s biggest source of growth is the rapid rise of AI technologies that rely on its high-end graphics processing units (GPUs) to function.
Gone are the days when Nvidia’s financial situation was dictated by gaming and small use cases. Today, there’s an arms race for the components that enable AI research and innovation — and Nvidia’s got the goods everyone wants.
According to estimates from BIS Research, the AI industry’s spending on semiconductors totaled around $15 billion last year. But spending has already picked up dramatically in 2024, providing a tailwind that has more than doubled Nvidia’s revenues over the past 12 months.
BIS Research expects that spending to increase by nearly 32% over the next several years, with plenty more growth expected beyond that. Nvidia has an estimated 90% market share in AI GPUs, positioning it to capture the lion’s share of this long-term growth trend. Nvidia should also directly benefit from the rise of crypto, as it specifically designs many of its GPUs for cryptocurrency mining.
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What’s the one category that could outpace the entire value of the crypto industry? AI. And in that arena, Nvidia is the stock to bet on.
Diversify your portfolio with this fintech
Nvidia’s market cap will likely prevent it from rising by another 1,000% anytime soon. But there’s one fintech stock that has the potential to do so: Nu Holdings(NYSE: NU).
Most investors have never heard of Nu, even though it has a market cap of nearly $70 billion. That’s because the bank operates exclusively in Latin America, and the only way to access its services is via smartphones. Its strategy upended Latin America’s banking industry a decade ago. Instead of building and operating costly physical branches, Nu offered its services directly to consumers online. This lowered costs, allowing it to compete aggressively on price and offerings.
Moreover, it allows Nu to innovate faster than the competition. When the company launched its Nu Cripto platform — a service that allows people to buy, sell, and transact in various cryptocurrencies — it attained 1 million users in a matter of months. Innovations like this help explain how Nu has gone from essentially zero customers a decade ago to more than 100 million today.
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But Nu is far from done growing. There are more than 650 million people in Latin America, and Nu has proven its ability to penetrate markets quickly. More than half of all Brazilian adults are now Nu customers, and Nu has been replicating its playbook in new markets like Mexico and Colombia.
Analysts expect sales growth to be around 44% this year, followed by another 30% in 2025, and there’s a good chance that Nu will maintain double-digit percentage growth rates through the next decade and beyond. This is a long-term story, but Nu has the potential to match or exceed the performance of most major cryptocurrencies.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $630,099!*
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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.
2 Tech Stocks With More Potential Than Any Cryptocurrency was originally published by The Motley Fool
