Though Bitcoin (CRYPTO: BTC) got off to a blazing start in 2024, the cryptocurrency has surrendered some of those gains. Despite making little progress overall in the past five months, in typical crypto fashion, the broader market landscape continued to evolve rapidly.

A deeper dive into Bitcoin's current standing, macroeconomic indicators, and recent crypto industry developments reveals why, despite its recent stagnation, Bitcoin remains a screaming buy today.

Short-term catalysts to watch

There are several catalysts currently putting Bitcoin in a bullish spotlight. These could be grouped into short-term and long-term categories, but both sets highlight why Bitcoin might be poised for another leg upward in the near future. First, let's explore some short-term factors.

1. The Bitcoin halving

Among the most crucial events in Bitcoin's lifecycle are its halvings, the most recent of which took place in April 2024. The halving process is central to Bitcoin's monetary policy, reducing the rewards miners receive by half, thereby cutting the amount of new Bitcoin entering circulation. This effectively halves Bitcoin's growth rate, creating upward price pressure as long as demand remains steady or grows.

Historically, Bitcoin has surged after each halving. In fact, the price of Bitcoin has typically jumped more than 100% in halving years. What's even more compelling is that Bitcoin has delivered an average return of 350% in the years after a halving. If history is any guide, Bitcoin's post-halving trajectory could still deliver significant gains to investors.

2. The rise of institutional investors

Another bullish driver for Bitcoin is the influx of institutional investors. During the past year, the introduction of spot Bitcoin exchange-traded funds (ETFs) has allowed large financial players to enter the market in a regulated and familiar way. Since the launch of these ETFs, Wall Street giants such as Goldman Sachs, BlackRock, and even the Michigan and Wisconsin state pension funds have jumped into the Bitcoin game. These institutions, which had previously been restricted from investing directly in Bitcoin, now have a clear pathway to do so through ETFs.

The results have been nothing short of staggering. These Bitcoin ETFs have become the most successful exchange-traded funds in history, reflecting a tidal wave of demand. The introduction of institutional investors into the market has not only further legitimized Bitcoin, but also holds the potential to add tremendous buying pressure to its limited supply.

3. The Federal Reserve's rate cuts

The Federal Reserve's recent decision to cut interest rates for the first time in more than four years could be another significant catalyst for Bitcoin. Although rate cuts and Bitcoin might seem unrelated at first glance, they're closely connected on several levels.

Firstly, when interest rates fall, investors are typically incentivized to take on more risk. In low-rate environments, the opportunity cost of holding safer investments such as bonds, becomes less appealing. Instead, investors often shift capital into riskier assets, including stocks and cryptocurrencies, in search of higher returns. This so-called risk-on environment tends to support Bitcoin's price appreciation.

Secondly, lower interest rates lead to more liquidity in the financial system. In the 2021 bull market, when rates were near zero, excess liquidity found its way to Bitcoin and helped drive up its price by more than 100% at one point.

Perhaps most importantly, rate cuts typically weaken the U.S. dollar, which could spur inflation. This is where Bitcoin's unique properties truly shine. Unlike fiat currencies, which central banks can print in unlimited quantities, Bitcoin has a hard lifetime cap of 21 million coins (about 19.8 million now circulate). Its decentralized nature and fixed supply make it an attractive store of value, particularly in times of inflation. As fiat currencies lose purchasing power, Bitcoin's scarcity becomes even more appealing, preserving its value over the long term.

Bitcoin's long-term value proposition

Bitcoin has plenty of catalysts on the horizon that could propel its price higher. However, the true value of Bitcoin goes far beyond these immediate factors.

In a world where government debt burdens continue to skyrocket, fiat currencies are regularly debased through inflation, and economic policies are enacted without considering the average person, Bitcoin stands as a beacon of hope.

Its decentralized network and finite supply ensure that no central authority can manipulate it, making Bitcoin perhaps more than just an asset but a necessity to preserve (and increase) one's wealth. It is a unique asset that can serve as a hedge against not just inflation but also broader economic instability.

While there are several reasons for optimism regarding Bitcoin in the coming months, it's important to remember that halvings come and go, institutional interest can ebb and flow, and monetary policy is always subject to change. All this is to say, Bitcoin will experience more bear markets over time. However, for those with a long-term perspective, Bitcoin's value proposition remains strong, making it a buy today and for the foreseeable future.

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RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Goldman Sachs Group. The Motley Fool has a disclosure policy.

Bitcoin: Is It Time to Buy, Sell, or Hold in Today's Changing Market? was originally published by The Motley Fool