Key Points
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Bitcoin is facing a crisis of confidence at the moment.
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There’s a swath of different issues that its detractors point to as being reasons to sell it.
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All those reasons are inherently short-term or otherwise non-permanent.
Every Bitcoin sell-off arrives with its own funeral procession. Bitcoin(CRYPTO: BTC) has shed about 21% in a month, and, right on cue, the eulogies are back.
The most common reasons people cite for Bitcoin being dead are that lots of exchange-traded fund (ETF) capital is exiting, which has coincided with sentiment being extremely grim for months on end. That’s before even discussing Strategy, which is supposedly the last deep-pocketed buyer still standing, and which just sold some of its hoard for the first time in years.
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It’s true that there’s a confluence of bearish forces at play right now, and they’re pushing down the price of the coin quite forcefully. Let’s investigate whether that invalidates Bitcoin’s investment thesis, so we can determine if it’s still worth buying and holding forever.
Image source: Getty Images.
The selling is real, and it might not stop soon
Spot Bitcoin exchange-traded funds (ETFs) just saw outflows of $4.4 billion across 13 straight sessions, which is the longest outflow streak since the ETFs launched in 2024. At the same time as sales have accelerated, demand is lower.
There’s a macro backdrop of rising inflation, considerable geopolitical (and thus economic) uncertainty, and an exuberant stock market driven by hype around AI stocks and an upcoming massive IPO season. In this economy, an old cryptocurrency that’s been falling for months is a tough sell to most investors.
As for the narrative about Strategy being the only business buying Bitcoin, it doesn’t hold up. While Strategy reported buying 1,550 BTC on June 8, a handful of the ETF issuers bought Bitcoin too. So while demand over the last couple of weeks has indeed been weaker, it’s far from zero.
This asset is still worth owning
Capital outflows from ETFs indicate that the marginal bid is turning negative for a few weeks, not that the coin’s buyer base is leaving for good. Weakening demand for an asset is a sentiment problem, and sentiment has historically recovered, especially for an asset as robust as Bitcoin. The original cryptocurrency has recovered from many sharp drops over the years.
Furthermore, none of these issues are permanent in nature, and none actually affect what makes the coin worth owning in the first place. The coin’s supply is still capped at 21 million BTC. Its new issuance will still halve on schedule to ensure that the coin will remain scarce, and no central bank can conjure up more of it, even if it might really want to.
Therefore, it still makes sense to buy and hold Bitcoin forever, as long as you’re patient. Its scarcity moves the price over quarters and years, not months. Buy small fixed amounts of it on a regular schedule, and keep some cash on hand to load up during panics. Soon enough, the troubles of the last few weeks will be entirely forgotten.
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Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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