Bitcoin at $100,000! You’ve Just Bought Some, What Next?

What Happened?

It made it.

Bitcoin climbed to and surpassed $100,000.

Having reached that target, it has made a fool of many people.

It has made a fool of most investors, including dividend investors, gold bugs, Wall Street fund managers, bank CEOs… just about anyone you can name.

So, what happens now?

Why it Matters

As Bloomberg News reports:

‘The six-figure price reached Wednesday by the original cryptocurrency represents not only a 199,999,900% gain from the 5 cents it fetched 15 years ago — it’s also acceptance, for everyone who kept the faith. No longer is this enigmatic internet money considered by polite society little more than a plaything of outsiders and outlaws. With the embrace of the next president and some $108 billion directly tracking the digital asset in exchange-traded funds, Bitcoin has crossed the chasm into something resembling legitimacy.’

For many, the Bitcoin price rising to this ‘magical’ target is validation.

It validates everything they’ve said about Bitcoin as an asset for the past 10 years or more.

Yet, extraordinarily, despite the tremendous run-up in the price, most Americans still don’t own any Bitcoin.

A study by the Pew Research Center in 2021, and referred to by website Bitbo.io, around 16% of American adults admitted to ever buying Bitcoin.

For comparison, Gallup conducted a poll showing that 62% of American adults own stocks directly or through a mutual fund.

You can see on the chart below, that number has fluctuated over the past 25 years. From a high of 65% of adults in 2007, to a low of 52% in 2013 and 2016.

Source: Statista

Even without a stock chart overlaying this data, it’s clear to see a correlation. The more folks invest in the market, the higher stock prices tend to go… which draws even more people in.

You can see where we’re going with this. No doubt, since 2021 the number of active Bitcoin investors has increased. That’s almost certain following the approval of Bitcoin ETFs (exchange-traded funds) earlier this year.

Looked at in that context, the Bitcoin price rise this year shouldn’t be surprising.

How it Affects You

Of course, the other way to think about it is that over that since 2019 through to today, the Bitcoin price hasn’t increased in a straight line.

It climbed from $7,000 in 2019 to $60,000 in 2021, back down below $17,000 in 2023 to over $100,000 this week.

Only the bravest of forecasters would confidently predict where it will be three months or a year from now.

But here’s the bottom line: We’re sure the hot news about Bitcoin hitting $100,000 will draw a whole bunch of people into the asset. Folks who have long resisted buying until now.

And that can be a big risk. After resisting for so long, the temptation can be to ‘over invest’ in an asset to try to ‘make up lost ground’. Folks have likely done this with Nvidia (NVDA) stock too, which is up 218% over the past year.

All we can say is, if you’ve bought Bitcoin for the first time recently, don’t go crazy by over-investing. Think of it as you would any other investment. You know how volatile the Bitcoin price has been, why not dollar-cost average into it?

You’ve made the first step by investing. Now take it steady. If you still like it, add to your initial stake with small amounts over time. That will allow you to build up a position, without over-committing at what could be Bitcoin’s highest price for some time.