Bitcoin drops below $60,000. Here’s Why I’m Still Riding the Cryptocurrency Roller Coaster.

If you’re like most Bitcoin (BTC 3.13%) investors, you’re probably more than a little worried right now. Something is wrong. After reaching a new all-time high of $73,750 in March, Bitcoin failed to find its way higher and has now fallen below the $60,000 mark. Even worse, some analysts are predicting that Bitcoin could fall as low as $50,000 before recovering.

But I’m still willing to ride the cryptocurrency roller coaster with Bitcoin. This cryptocurrency, famous for its wild swings and huge volatility, is likely to have another bullish run until the end of the year. Here’s why.

Bitcoin volatility is a feature, not a bug

The major knock against Bitcoin is that it is simply too risky and too volatile to keep in a long-term investment portfolio. But that’s simply not the case. In fact, I would argue that Bitcoin volatility is a feature, not a bug. In short, if you want massive spike years where the price of Bitcoin rises by 150% or more — as it did last year — then you have to be willing to tolerate sharp bearish spikes along the way.

Image source: Getty Images.

In fact, much-watched investor Cathie Wood of Ark Invest crunched the numbers last year and found at least five periods in Bitcoin’s 15-year history when the value crashed by 77% or more. And each time, Bitcoin came back stronger than before. If you take a quick look at Bitcoin’s trading chart over the past five years, you won’t see a single continuous increase in price. Instead, you will see significant peaks and valleys.

For this reason, “buy the dip” investors who do not need their money in the short or medium term have gravitated to Bitcoin. In short, buy Bitcoin every time the price drops 20% or more and then HODL (“hold on for dear life”). This way, they always buy Bitcoin at a discount. That’s the situation now, with Bitcoin down more than 23% from an all-time high in mid-March. And while there are no guarantees, history says it’s headed.

We are at the beginning of a four-year cycle

Every four years, there is a Bitcoin halving. This event, which results in the halving of rewards paid to Bitcoin miners, has a number of further consequences that make Bitcoin much more attractive to investors. For example, a halving increases the overall scarcity of Bitcoin. And it also has a long-term disinflationary impact, making Bitcoin more attractive to investors looking for a long-term store of value.

As a result of the halving, Bitcoin tends to move in four-year cycles. At the beginning of the cycle, the price of Bitcoin rises slowly before suddenly increasing in value to a new all-time high. Bitcoin has had three previous halving cycles — in 2012, 2016 and 2020 — and each time, it generally followed the same pattern. Usually, the optimistic period of the cycle lasts between 12 and 18 months.

Bitcoin’s most recent halving happened on April 19, so we’re still at the beginning of a new four-year cycle. If you ditch Bitcoin now, just four months after the April halving, you could be missing out on what has typically been the most bullish time of the cycle.

That said, this is not an invitation to try to time the market. But simply knowing Bitcoin’s cycle helps put its current price into perspective. Bitcoin is trading at a 20% discount, at a time when the full impact of the halving has likely not occurred yet.

Buy discount on Bitcoin

Of course, past performance is no guarantee of future performance. And there is no reason to believe that Bitcoin will always follow a four-year cycle as it becomes an increasingly popular asset for both retail and institutional investors.

In fact, there are already skeptics who believe that the launch of new Bitcoin exchange-traded funds (ETFs) earlier this year may have already messed up Bitcoin’s four-year cycle. All the money that should have flowed into Bitcoin after the April halving suddenly gushed into Bitcoin in January, extinguishing the expected increase in the halving.

That said, I’m still buying Bitcoin. With Bitcoin now below $60,000, get an additional 20% discount on a digital asset that some money managers believe could reach $200,000 by the end of 2025.

Of course, a lot of things will have to go Bitcoin’s way for that to happen. But I fully expect a post-election rally for Bitcoin and another run to a new all-time high by the end of the year. But hold on tight and buckle up because it’s going to be a wild ride.