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Bitcoin (BTC 3.76%) is down almost 60% year to date and 70% from its all-time high as broader stock market volatility and recession fears spill into the crypto market.
Despite widening Bitcoin adoption, the token continues to be treated as a high-risk asset. And in today's rising interest rate environment, risky assets are under pressure. As the cost of capital rises, it dissuades people from speculating in new markets like crypto.
However, long-term investors could consider buying Bitcoin now. Here's why.
Red, purple, pink, and blue shapes and colors dance around computers, circuit boards, and other electronic renderings.
IMAGE SOURCE: GETTY IMAGES.
It's on sale
Bitcoin tumbled below $18,000 on June 18. The entire market cap of all outstanding cryptos now is about $900 billion, which is less than Bitcoin alone was worth at its peak on Nov. 10, 2021.
As bad as the Bitcoin sell-off has been, other top cryptos like Ethereum (ETH 9.23%), Cardano (ADA 5.01%), and Solana (SOL 5.20%) are down even more as of June 21.
Bitcoin Price Chart
BITCOIN PRICE DATA BY YCHARTS
The simplest reason to buy Bitcoin is that its fundamentals haven't changed, but its price is much less than it was not that long ago. After Bitcoin's massive run-up between 2020 and most of 2021, many investors felt as if they had missed out on Bitcoin. The sell-off provides a chance to buy at lower prices. However, it's worth mentioning that an investor has to be careful of the risks of Bitcoin and how they buy and hold it.
One of the scariest elements of the crypto sell-off has been the turmoil at Celsius Network, a crypto exchange that suspended withdrawals and transfers on June 12. Celsius, like many exchanges, offers high interest rates for its users, enticing them to hold assets on its platform. But Celsius' balance sheet appears to be impaired by the crypto sell-off to the extent it may not be able to honor withdrawals. And if Celsius goes bankrupt, users could lose their assets.
So although the fundamental investment thesis for owning Bitcoin hasn't changed, the vulnerability of exchanges means that investors should be more careful than ever about where they buy and store their cryptocurrency.
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