Bitcoin (CRYPTO: BTC) The price is around $68,000 (as of March 6), far from its all-time high of $126,000 in October. Five straight down months have eroded market sentiment about the coin, and exchange-traded fund (ETF) flows have complicated the sell-off.
But buying assets that almost no one wants is often when they are much cheaper than what they are really worth. Rumors of Bitcoin’s death have been greatly exaggerated. And that means if you’re looking to allocate $1,000 in crypto right now, you should probably buy Bitcoin — here’s why.
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For a long time, the price of this coin is almost higher than today, and it is all thanks to this shortage.
Nothing about this crash from an all-time high changes the fact that there are only 21 million bitcoins in existence. A little over 95% of that amount has already been mined, and only about 450 new coins enter circulation every day. Today, an estimated 3 to 4 million of the approximately 20 million coins in existence have been lost forever.
This means that even with somewhat steady demand, assets will experience strong price pressures, as supply growth slows over time.
On this front, the big guards are gathering. US spot Bitcoin ETFs hold about 1.2 million bitcoins. Bitcoin Treasury Inc Strategyformerly known as MicroStrategy, has more than 720,000 coins after reporting its most recent purchase in early March, and many other public companies do. And among sovereign nations, the top 10 Bitcoin holders control about 2.5% of its outstanding supply.
None of these great guardians are the type to sell in a panic. They will likely keep for a long time. This helps ensure that future buyers will pay higher prices than they do today.
Another factor that makes now a great time to buy $1,000 worth of Bitcoin. It is currently trading at or below what most miners are producing.
By some measures, the average production cost of a bitcoin is $77,000, but a few other estimates put the cost slightly higher, with some suggesting that the total production costs are as high as $167,800 per coin. Historically, periods when Bitcoin traded below the cost of production were short-lived, and its price quickly rose to close the gap.
