1 Huge Reason Bitcoin Will Probably Keep Rising and Rising This Year

Source Motley_fool

Bitcoin (CRYPTO: BTC) is up about 25% in the last 30 days alone. It's more likely than not to continue rising, and there's one huge and undeniable reason that makes that the case.

So, without further ado, here's why the rest of 2025 is probably going to be a great time for holders.

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Investors' emotions matter a great deal

We all look at the performance of our investments. The brokerage websites and applications make it easy to see exactly how your favorite stock or cryptocurrency is performing relative to your cost basis. Total gains are denoted in green, and losses in red.

The temptation to sell one of your holdings is much higher when your total return is negative. Conversely, it's fairly easy to continue retaining an investment when it's obvious that your (genius) investment thesis is playing out, as shown by a healthy gain. If you're like most people, you probably take a look at the price chart of your investments from time to time, whether you're holding them at a loss or a gain. Upward-climbing charts are, at least psychologically, proof that your gains will continue to grow, whereas tumbling lines on the chart are sufficient to cement your dread that your losses will deepen, prompting you to sell.

A pair of investors celebrate while looking at a cell phone while in a store.

Image source: Getty Images.

Putting aside the invalidity of short-term price-based reasoning about whether to buy, hold, or sell an asset, it's undeniable that investors are an emotional bunch that tend not to be able to maintain a long-term mindset about their holdings when faced with the anxiety of experiencing losses. At the same time, when most of the investors who hold an asset are holding it at a gain rather than a loss, incredible things can happen -- and that's exactly what's happening with Bitcoin right now.

As of May 5, according to data from Glassnode, a cryptocurrency data provider, at the price of $95,000 per coin, about 88% of all Bitcoin wallets were holding Bitcoin at a gain rather than a loss. And that's the huge reason why it's likely to keep climbing.

The price of the coin is currently more than $103,000. The overwhelming majority of Bitcoin's holders are not under any emotional pressure to cut their losses whatsoever. That means they are far more likely to continue holding and adding to their positions than they are to sell.

That is going to continue driving the coin's price even higher in the short term, even before taking any of the other powerful drivers for its value into account.

Be aware that this principle cuts both ways

It is very unlikely that the price of Bitcoin will trend upward forever solely on the basis of most holders having an unrealized profit this month. There will probably be some macroeconomic events that are able to crack the market's bullish sentiment, causing some investors to sell. In other words, Bitcoin is destined to experience a crash or a sharp fall at some point in the future, and it is very likely that the decline will be so sharp that many investors sell their holdings at a loss and swear off cryptocurrencies altogether.

That doesn't detract from the long-term thesis for buying and holding Bitcoin, but it's a fact of life that assets go through cycles of being heavily favored and disfavored.

The way to deal with this reality is to have a plan for investing during both the asset's good times and also its hard times. Dollar-cost averaging (DCA) with small amounts of capital when the market is practically euphoric about Bitcoin, like now, is a way to make sure you won't get wiped out to the point of feeling bad if there's a decline. At the same time, keeping some of your capital in reserve to buy the dips in the coin's price is also a good idea because doing so will enable you to capture upside when other investors are panicking.

The core pillar of this two-handed strategy is to hold your coins for the long term, which in this case means at least four years or so, but preferably closer to 40 years or so. The longer you can diligently accumulate Bitcoin, the more gain you will get from its inherent and ever-escalating scarcity, as well as medium-term drivers like institutional and sovereign adoption. Detach your investing habits from your emotions, and it won't matter how many other investors are holding Bitcoin at a gain or a loss -- you will be taking advantage of its value-generating capabilities all the while, regardless.

Should you invest $1,000 in Bitcoin right now?

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Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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