The Best Cryptocurrency to Buy With $500 Now
Key Points
Bitcoin is now trading almost 25% below its all-time high of $126,000 from October.
Buying the dip has typically been a good long-term strategy for accumulating Bitcoin at bargain prices.
If the drawdown in Bitcoin continues, dollar-cost averaging could be one way to mitigate risk.
- 10 stocks we like better than Bitcoin ›
As a result of the latest sell-off in the crypto market, it might seem like it's close to impossible to find a cryptocurrency capable of rising in price by the end of the year. Across the board, top cryptocurrencies are down anywhere from 10% to 30% over the past 30 days.
But there's one cryptocurrency that stands out as a potential bargain. It's now almost 25% below its all-time high from just one month ago, and has one of the best historical track records in the crypto market. Yes, I'm talking about Bitcoin (CRYPTO: BTC).
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Buy the dip on Bitcoin?
If history is any guide, any dip in the price of Bitcoin usually turns out to be a fantastic buying opportunity. That's because, over the course of the past 15 years, Bitcoin has been on a clear upward trajectory. Thus, buying the dip usually becomes a great opportunity to load up on Bitcoin at a bargain price.
Just check out Bitcoin's historical track record. In the period from 2012 to 2025, the worst bull market year for Bitcoin was 2015, when the world's largest cryptocurrency "only" returned 36% to investors.
In seven of those years, Bitcoin actually grew at triple-digit rates. In 2013, for example, Bitcoin skyrocketed by 5,428%. In 2017, Bitcoin increased in value by 1,375%. And in 2020, Bitcoin soared by 305%.
Bitcoin's 4-year cycles
There's just one caveat here, though. Bitcoin typically follows a 4-year cycle. That might sound completely random, except for one fact: Bitcoin undergoes a halving event every four years. The thinking here is that the Bitcoin halving accelerates its price appreciation, until it reaches a final blow-off top. At that point, Bitcoin collapses in value before the next cycle begins anew.
Image source: Getty Images.
The numbers appear to bear out this hypothesis about Bitcoin. The three worst years in the history of Bitcoin -- 2014, 2018, and 2022 -- are spaced out exactly by four years. So that would tend to suggest that 2026 is the next big drawdown for Bitcoin.
Of course, there are those who say that Bitcoin's 4-year cycles are a thing of the past. They claim that the recent tsunami of institutional investor money into Bitcoin has sufficiently insulated it from the risk of a major drawdown. Yes, Bitcoin might still drop 25% in price, they say, but it's not going to fall by 60% or more, as it has in the past.
How to deploy $500 in Bitcoin
When it comes to investing in Bitcoin, investors have a wide range of potential alternatives. They could invest in Bitcoin directly, via a major cryptocurrency exchange such as Coinbase Global (NASDAQ: COIN). They could invest in Bitcoin proxy stocks that are highly tied to the price trajectory of Bitcoin, such as Bitcoin treasury companies and Bitcoin mining companies.
Just as easily, investors could invest indirectly in Bitcoin, via the new spot Bitcoin ETFs. These are designed to give investors 1:1 exposure to the price of Bitcoin. If Bitcoin goes up 100% in a year, as it has in the past, then the price of the spot Bitcoin ETF should also go up by 100%.
What makes these ETFs so attractive is that, with one exception, they are all priced under $100 right now. For example, the most popular spot Bitcoin ETF -- the iShares Bitcoin Trust (NASDAQ: IBIT) -- currently trades for just $55.
That makes it a prime candidate for a dollar-cost averaging (DCA) strategy. With a DCA strategy, you commit to buying a set amount of Bitcoin each week or month, regardless of its price. When the price of Bitcoin is soaring, you are buying less. But when the price of Bitcoin is dipping, as it is now, you are buying more.
My prediction is that Bitcoin is coming to the end of its current four-year cycle, and a major drawdown could be right around the corner. Thus, I'm not going to deploy $500 upfront in one massive Bitcoin buy. Instead, I'm going to DCA into Bitcoin on the way down, spreading out that $500 over a series of regular buys.
If I'm right, I'll be able to buy low and sell high. That's the only way to make money when investing, and Bitcoin is the perfect way to do that right now.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and iShares Bitcoin Trust. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
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