Bitcoin has had something of an up-and-down month in June. At press time, the currency is trading for just over $11,100, though this is small beans compared to the $12,200 it was trading for yesterday. It’s even smaller given that roughly a week ago, it was trading for nearly $13,600.
Bitcoin Is Still at the Top
Despite all of this, bitcoin is still gaining, though this month has been marred by some serious corrections. Last Wednesday, bitcoin dropped down to about $10,400, which means the currency ultimately lost about 12 percent of its overall value, though this isn’t something we should consider “abnormal.”
Remember in May when bitcoin rose to $9,000 then fell into the $7,000 range temporarily? These corrections happen, especially when price spikes occur rather suddenly, which they have, and we can’t assume that bitcoin’s future is about to be clouded. After all, bitcoin later rose beyond $9,000 and then some.
Blockchain Capital’s Spencer Bogart says this is all completely normal, and explains why such corrections are not only common, but even necessary if bitcoin is going to be a stronger currency. In a recent interview, he states:
For one, this is natural for any kind of asset that has fixed supply but fluctuating demand, particularly one like bitcoin that’s early on in its life cycle.
This certainly applies to the granddaddy of crypto. It is said that only 21 million units of bitcoin will ever be in existence, and already there are about 18 million in circulation. We’re likely to see mining top off in the coming years, which means bitcoin’s value is likely to change as this mining comes to an end.
Bitcoin has also seen the demand surrounding it alter. In 2018, for example, everyone lost interest thanks to its ongoing price drops. Since April of this year, when spikes began occurring again, people have grown more accustomed to bitcoin and see it as a much stronger store of value.
Bogart explains:
People assume you’re buying this art because it’s beautiful, right? You’re buying this vintage Ferrari because maybe you’re going to drive it around. These things don’t adorn people’s walls. They’re not driven on the streets. They sit in vaults and in warehouses, so they’re a store of value and a scarce asset because there will be no new Picasso paintings, [and] there will be no new vintage Ferraris.
Be Smart When You Invest
Despite his confidence in crypto and bitcoin, Bogart says that anyone interested still needs to remain careful. He suggests purchasing only a small percentage of bitcoin or crypto so that it amounts to about one percent of your portfolio. From there, you shouldn’t touch it for at least three years after buying it:
That’s strictly a purchase in a scarce asset that’s used as a store of value to preserve capital over time.
