Bitcoin (CRYPTO: BTC) has risen dramatically since the beginning of April to a price of nearly $ 60,000. Is it still a good time to add the leading cryptocurrency to your portfolio? In this Fool Live video clip recorded on March 18thSenior analyst John Rotonti and senior analyst Bernd Schmid of Motley Fool Germany discuss the price of Bitcoin and how investors should think about it.
John Rotonti: So the price of Bitcoin has skyrocketed lately. I think it’s around $ 60,000 per coin. Is It Too Late For Investors To Get In?
Bernd Schmid: I do not believe that. I personally don’t buy it anymore. It always depends on when you get in. I look at it from a portfolio perspective. But I guess how I see what could happen to Bitcoin in the short term or long term, the one thing I mentioned earlier is the $ 1 trillion market cap compared to Bitcoin in the future. I think a very likely use case is that Bitcoin could be the digital gold. Then it could be 7X from today until whenever that could happen, or as I mentioned earlier, it could theoretically be even higher if it replaces more than just gold. I think it’s the best way to at least get the measure of whether this thing is worth anything. It’s certainly not too late, but and this is what I want to mention based on historical cycles, there is roughly a four year cycle that Bitcoin has, and Bitcoin has actually been down about 80-90% every four years.
Rotonti: Where are we in this cycle? Do you know where we are in this cycle? Year two, year three?
Schmid: Yes. In fact, the pool part of the cycle is pretty short. I think it’s about a year, don’t fix it like I’m not 100% sure. But we are like in the middle of it, beginning to middle. Actually I have a diagram of what I did and actually PlanB, but I mentioned earlier that it does too. I’ve done it myself. I’ve chartered the last two cycles and the average of the last two cycles. Right now, and for the last two cycles, you have a price movement of 30 to 50 times from the start of the cycle. So whatever, from $ 100 to $ 5,000 or last time, I think the top was about $ 20,000. This cycle started at around $ 5 to $ 10,000. So if you count 20 times that, you’re somewhere between $ 100,000 and $ 200,000. This can flow into the cycle here. Personally, even if we have talked about this cycle, I think personally if you believe that the top we have reached in the same timeframe as the last two cycles will be shifted, it will be about mid to end, or start midway. Bitcoin increasing two to three times until it tops out in a few months. But then be aware that you never know what will go. Don’t know if the top is up, maybe even sooner, and it is likely that there will be an 80% drop at some point I think. I still believe
Rotonti: That fascinates Bernd and I love how to scale it by comparing it to real gold. Because if this is the digital gold and it currently has a market cap of $ 1 trillion. I think you’ve said so far that we’ve mined between $ 7 trillion and $ 10 trillion in gold, right? So if a potential 7-10 run is possible from here.
Schmid: You know, when you look at it from a value investor’s perspective, you actually know that this is difficult. It never just comes down to the value of actually it always overshoots and undershoots. So it is very likely that you will go even further. You just never know when all of these things will happen. One thing is certain, however, which is relatively certain that we will have very high volatility. You may have dropped 50% in a short amount of time. You have to start and think about these things as you invest in them.
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