Summary Bitcoin's slowing rate of supply growth and increasing institutional adoption, especially post-Trump's victory, signal strong fundamentals and a bullish outlook for continued price growth. A dollar-cost-averaging strategy is key, as exemplified by Michael Saylor's MicroStrategy, meaning Bitcoin is a buy at any price. Institutional inflows from ETFs and corporate treasury strategies, alongside the 2024 Bitcoin halving, create a favorable opportunity for accumulation. Despite criticisms, Bitcoin's growing 'hodler' base and nation-state interest suggest an opportunity for a parabolic price period in 2025, making it a buy even at all-time highs. Prelude The digital asset Bitcoin USD (BTC-USD) has continued to break new all-time highs after Trump's victory and the sweeping 'Red Wave' led to optimism of a looser regulatory environment and whispers of a 'Strategic Bitcoin Reserve' . I last wrote about bitcoin in an article titled Becoming A Bitcoiner: Understanding Blockchain Technology And Metcalfe's Law. In that article, I described Blockchain technology and the difficulty of valuing disruptive new technologies. I rated Bitcoin a buy due largely to the continued increase in mining hash rate, signaling the ongoing acceptance of the Bitcoin network. Today, I am reiterating my Buy rating on a rapid improvement in fundamentals due to Trump's victory. My articles on Bitcoin are titled 'Becoming a Bitcoiner' because they document my continued education into Bitcoin and what makes this asset trade the way it does. "Bitcoiners" are the hardcore believers in blockchain technology and its capacity to change life as we know it. They believe Bitcoin is heralding in a new digital age where we can transact on the internet with a trustless digital native currency. Bitcoiners see Bitcoin as a currency. They believe that it is a buy at any price because it's simply better to hold over most time frames than cash is. With this in mind, I return to the title of this article: buying at all-time highs is an integral part of being (and becoming) a Bitcoiner. This is mostly because Bitcoiners believe you should always be buying Bitcoin. The dollar-cost-averaging approach is useful for retail investors and institutions alike. The largest individual holder of Bitcoin (besides the creator Satoshi Nakamoto), Michael Saylor's MicroStrategy ( MSTR ), is the most prominent example of this approach. Saylor is the loudest proponent of Bitcoin that I'm aware of, and his shift to holding Bitcoin as a reserve asset instead of cash has been enormously beneficial to shareholders. Many skeptics will still be hesitant to buy at all-time highs, though. Such a volatile asset is due for a correction, right? In this article, let's discuss the factors that, I believe, will contribute to continued parabolic returns in Bitcoin. In fact, I believe the next time we see a material correction in Bitcoin, it may be 'correcting' to a price far higher than where we're at now. Despite being at all-time highs, it is still a very opportune time to accumulate bitcoin. Supply-Demand Dynamics The most widely understood benefit of Bitcoin over fiat money is its fixed supply. In all Economics 101 courses, students are taught that the balance between supply and demand dictates pricing behavior in free and open markets. For many years, demand for Bitcoin was generated from a small subset of enthusiasts, cypherpunks, and criminals. Bitcoin's first commercial use case was on the dark web marketplace the 'Silk Road' where many people bought and sold illegal goods. Much of the bitcoin within this marketplace was seized by the US government, who still holds those coins. It later became viewed as the leading indicator for bull runs across the broader cryptosphere, such as the ICO (initial coin offering) boom of 2017, the NFT (non-fungible token) boom of 2021, and more recently the memecoin boom in 2024. Through each of these periods, Bitcoin undergoes intense upward price movements that re-baseline it at higher highs and higher lows. Data by YCharts I believe we are at the onset of another period of intense upward price performance in Bitcoin because of increased institutional participation amidst the ever-slowing supply that is baked into the core of Bitcoin's Blockchain. Michael Saylor and MicroStrategy made headlines by announcing that the company plans to secure another $42b in new funding for Bitcoin purchases over the next three years. Block, Inc. ( SQ ) also purchases Bitcoin monthly using 10% of its gross profit from Bitcoin products. Block is also working on a leading-edge mining chip and has a leading self-custody hardware wallet known as Bitkey. Additionally, ETFs from major institutions like BlackRock ( BLK ) and Fidelity ( FNF ) have spurred major inflows and purchases of bitcoin. The approval of these ETFs earlier in 2024 already caused a significant run in the price of bitcoin. Meanwhile, Microsoft ( MSFT ) has an open proposal for shareholders to vote on Bitcoin purchasing plans. Even though management has recommended shareholders vote against this, it's indicative of a broader acceptance and conversation around bitcoin being used as a treasury asset. Shareholders like Vanguard, BlackRock and State Street ( STT ) will be eligible to vote on the proposal in December, all of whom now have a vested interest in increasing the rate of Bitcoin adoption. Increasing institutional ownership of bitcoin also comes at a time when some nations have begun accepting bitcoin as legal tender. Meanwhile, a recent Chainalysis report shows an increasing number of participants in the crypto sphere. The confluence of factors contributing to demand growth for bitcoin is powerful. When taken in tandem with the 2024 Bitcoin halving cutting supply growth in half and the optimism around a pro-crypto Trump administration, this is nothing short of a golden opportunity to accumulate bitcoin. The loudest criticism of bitcoin is a lack of use cases. Critics say that it is still valueless, since it doesn't have the same transactional utility as fiat money or store-of-value utility like gold or silver. Frankly, this doesn't matter. What matters is an increasing number of 'hodlers' (the bitcoiner term for someone that buys and holds bitcoin with no intent of ever selling), increasing institutional adoption, and increasing adoption by nation-states. The increasingly loud rhetoric around a US strategic reserve of Bitcoin has the potential of setting off another parabolic period for the price of bitcoin. From the nation-state perspective, bitcoin ownership is a matter of game theory. It's risky to be the first mover, but it is equally risky to be a laggard. If the US begins accumulating bitcoin, virtually all other nations will have the incentive to accumulate bitcoin, since their US Dollar reserves will now be linked to bitcoin by proxy. Some analysts believe this could help the US pay down its exploding national debt, but I won't pontificate on that at this time. Investor Takeaway Regardless of your opinion on blockchain technology or cryptocurrency, it's dangerous to bet against basic economics. Bitcoin's economic reality currently features exploding demand and slowing supply. With the confluence of factors contributing to strong demand growth, I expect another parabolic period for the price of Bitcoin in 2025. The next 'correction' will likely be a 'higher low' from where we are now (or *to* where we are now). Regardless, it remains an opportune time to accumulate bitcoin, even if for a momentum trade. Bitcoin remains a buy despite hitting all-time highs.
