There’s no denying that the “Magnificent Seven” tech stocks have been, well, magnificent over the past five years. All of them have at least doubled in value, and some have tripled, and Nvidia (NASDAQ: NVDA) has increased in value by a whopping 1,980%.
But what if I told you that Bitcoin (CRYPTO: BTC) has been equally magnificent over that same period? Over the past five years, Bitcoin has skyrocketed in value from just under $4,000 to its current price of $65,600. And if you take the past decade into consideration, Bitcoin’s performance has been even more jaw-dropping.
With the caveat that past performance is no guarantee of future performance, I’m buying more Bitcoin than Magnificent Seven stocks nowadays. Here’s a closer look at why it could finally be time to add Bitcoin to your portfolio.
More upside potential ahead
In its “Big Ideas 2024” report, Ark Invest analyzed Bitcoin’s performance against all other asset classes over a varying set of timelines, ranging from three to seven years. Bitcoin trounced the performance of every other asset class. Over seven years, Bitcoin delivered annualized returns of 44%, compared to just 5.7% for the average asset class.
And it’s likely that Bitcoin will continue this trend of outperformance for the foreseeable future. Wall Street analysts, hedge fund managers, and portfolio strategists keep ratcheting up their future valuations for Bitcoin. For example, Standard Chartered now expects Bitcoin to increase in value to $250,000 by the end of 2025.
And that forecast might be on the low end. For example, Tom Lee of Fundstrat Global Advisors now expects Bitcoin to hit a price of $500,000 within five years, while Cathie Wood of Ark Invest has doubled down on her original $1 million prediction for Bitcoin. In fact, she recently outlined one super-bullish scenario in which Bitcoin actually skyrockets to $2.3 million by 2030.
Mainstream adoption
A major reason for these skyrocketing valuations, of course, has been the recent launch of the new spot Bitcoin ETFs. These new investment products are helping to boost mainstream adoption by making it easier than ever before for investors to get access to Bitcoin.
Before January 2024, you needed a basic knowledge of crypto, a digital wallet, and an account with a cryptocurrency exchange to buy Bitcoin. That limited its mainstream appeal. Now you can buy Bitcoin as easily as any stock, Magnificent Seven or otherwise.
What makes this path to mainstream adoption so exciting is that Bitcoin is finally being recognized as a stand-alone asset class like stocks, bonds, and commodities. And that means investors might decide to bump up their Bitcoin allocations to optimize their portfolios.
Fidelity Investments, for example, has already started to suggest that anywhere from 1% to 3% of a portfolio should be allocated to Bitcoin. Over time, I fully expect this percentage to rise.
Growth in Bitcoin use cases
In addition, the number of Bitcoin use cases continues to grow. Ark Invest has identified eight unique real-world uses for Bitcoin, and each one should continue to grow in market potential over the coming years. Ark Invest arrived at its $1 million price forecast for Bitcoin by using a valuation model that takes future growth projections of these use cases into account.
One of these is the use of Bitcoin — not gold — as a long-term store of value. As this trend continues globally, it should help to push up the price of Bitcoin. In 2023, Ark Invest suggested that Bitcoin could account for 50% of the store-of-value market by 2030. And one year earlier, Goldman Sachs Group came up with a similar forecast of 50% for Bitcoin’s market share.
Bitcoin for the long haul
This is not to suggest that you should stop investing in the Magnificent Seven. And I’m not even suggesting that Bitcoin will outperform every single one of them over the next year or two. Nvidia seems to be doing so many exciting things with AI that it might have an edge over Bitcoin for now as a high-upside investment.
But over the long haul, I simply can’t think of a better investment than Bitcoin. As long as Bitcoin continues to gain in mainstream adoption, and as long as its existing and potential use cases continue to grow in value, Bitcoin could post huge price gains from here. It might not reach that magical $1 million price, but I’m highly confident that it can continue to outperform the Magnificent Seven.
Should you invest $1,000 in Bitcoin right now?
Before you buy stock in Bitcoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of March 21, 2024
Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin, Goldman Sachs Group, and Nvidia. The Motley Fool has a disclosure policy.
Forget the “Magnificent Seven” Tech Stocks. I’m Buying Bitcoin for the Long Haul was originally published by The Motley Fool