Bitcoin (CRYPTO: BTC) is currently valued at approximately $68,000 (as of March 6), a significant drop from its peak of $126,000 recorded in October. A streak of five consecutive monthly declines has severely dampened market enthusiasm for the cryptocurrency, with ongoing exchange-traded fund (ETF) withdrawals further fueling the sell-off.
However, acquiring assets that are largely out of favor often presents the best opportunities to buy them at their most undervalued price relative to their intrinsic worth. Reports of Bitcoin’s downfall have been greatly overstated. This implies that if you’re considering investing $1,000 into the crypto market today, Bitcoin is likely your optimal choice — and here’s why.
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In the long run, this digital coin’s value is almost certainly poised to climb higher than its present level, a phenomenon primarily attributed to its inherent scarcity.
The recent decline from its all-time peak doesn’t alter the fundamental fact that Bitcoin’s total supply is capped at 21 million units. Over 95% of this total has already been mined, with approximately 450 new coins entering circulation each day. Furthermore, an estimated 3 to 4 million of the nearly 20 million existing coins are considered permanently inaccessible.
This limited and decreasing supply growth means that even modest, sustained demand will exert significant upward pressure on the asset’s price.
Indeed, significant players are actively accumulating Bitcoin. U.S. spot Bitcoin ETFs collectively hold around 1.2 million bitcoins. The firm Strategy, previously known as MicroStrategy, a major corporate holder, possesses over 720,000 coins following its latest purchases reported in early March, with many other public corporations also owning the asset. Among sovereign nations, the top 10 Bitcoin holders account for roughly 2.5% of its circulating supply.
These substantial holders are generally not prone to panic selling; their inclination is to retain Bitcoin for the long term. This sustained commitment helps assure that future buyers will likely pay prices exceeding current levels.
Another compelling reason to invest $1,000 in Bitcoin right now is its current trading price, which sits at or below the cost incurred by most miners to produce it.
While some calculations place the average production cost for one bitcoin at $77,000, other estimates suggest a higher range, with certain all-in production costs reaching as much as $167,800 per coin. Historically, periods where Bitcoin’s market price falls below its production cost have been brief, with prices typically recovering swiftly to bridge the gap.