Down Almost 50% From Its All-Time High, Is Bitcoin Still a Buy?

It's easy for crypto investors to be down on Bitcoin (CRYPTO: BTC) right now. The world's most popular cryptocurrency is down almost 50% from its all-time high of $126,000 from just a few months ago.

Adding insult to injury, the price of gold continues to skyrocket, leading many to question the digital gold investment thesis for Bitcoin. But I'm going to take a contrarian stance right now and predict that the crypto is going to turn things around soon. It's still a buy, and here is why.

The return of digital gold

Admittedly, gold is having a moment right now. It's up more than 70% during the past 12 months and recently traded above $5,000 per ounce. That's heady stuff.

But crypto investors still think that the leading digital coin will outperform gold during the next 10 years. Speaking at a recent crypto industry event in New York, Dan Morehead, chief executive officer of the crypto-focused investment firm Pantera Capital, suggested that Bitcoin will "massively outperform" gold during the next decade. As the U.S. dollar continues to weaken over time, investors will shift into Bitcoin, given its scarcity of just 21 million coins.

The end of the Bitcoin four-year cycle

Even better, many crypto analysts think the infamous Bitcoin four-year cycle of boom and bust is a relic of the past. Skyrocketing institutional adoption, combined with a pro-crypto regulatory agenda from the Trump administration, should help to reduce the risk of a prolonged downturn. Some even think that Bitcoin is headed for an economic supercycle, leading to much higher prices during the next decade.

Image source: Getty Images.

Still, it's hard to ignore that the price of the digital coin does tend to collapse every four years. That was the case in 2014, 2018, and 2022. So is 2026 going to follow the same pattern? The hope is that, even if Bitcoin has further to fall this year, it will soon return to form, just as it has in every other boom-and-bust cycle.

A rising pace of institutional adoption

There are several different ways to think about institutional adoption. In its simplest form, it refers to big institutional investors loading up on crypto via the new spot Bitcoin exchange-traded funds, as they seek to gain access to an entirely new asset class.

That's something that just isn't going to vanish soon. Maybe the most risk-averse of these institutional investors keep their asset allocations to 1% or lower. But the growing consensus is that these allocations will increase over time, potentially rising to 3% or higher within the next few years. If that's the case, then the price of Bitcoin has no place to go but up.

The long-term outlook

It can be hard to see the big picture when market sentiment on Bitcoin is this bad. I get it. But crypto investors have seen this story before. After every price collapse, Bitcoin returns to form, better than ever. I'm expecting the same to happen this time around as well.

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.