Bitwise: Is it too late to buy Bitcoin now?

I try to write this Chief Investment Officer Memo (CIO memi) about the biggest questions facing cryptocurrency investors each week. That’s why one year ago, on December 11, 2023, the title of my CIO memo was “Is it too late to buy Bitcoin now?”

At the time, Bitcoin was up 165% year-to-date, trading at over $40,000. Here’s what I wrote:

Most people I talk to these days want to know: Is it too late to buy Bitcoin now?

Most people believe that 2024 will be a great year for cryptocurrency, including the possible launch of a Bitcoin ETF, BlackRock's entry into the field, Bitcoin halving, and more.

But as of this writing, Bitcoin is up over 165% year to date, while Coinbase is up over 300%. Have they missed the party?

I could write almost the same thing today.

Again, there is optimism about 2025, with a pro-crypto government in Washington, and Bitcoin ETFs, corporations, and governments buying up Bitcoin in droves due to the reduced supply caused by the 2024 halving.

Again, everyone wants to know if it’s too late to buy Bitcoin now.

My answer this year is the same as it was last year: “It’s not too late.” Most investors still haven’t been exposed to Bitcoin. Until that changes, you are, by definition, still in the early stages.

I share this recap not as a victory lap — cryptocurrency forecasting can be a humbling exercise — but in the hope of putting this feeling into context.

Bitcoin always feels like it’s too late to buy in. It always has been, and it always will be.

But what about a tactical retreat?

What people really want to know is, will Bitcoin see a pullback that will allow them to enter the industry at a lower price level?

The answer is, yes, most likely. Bitcoin is very volatile and we should expect sharp pullbacks.

But trying to time these pullbacks is risky. Those who think they are in at $40,000 in December 2023 are still waiting for a $100,000 pullback. Will they ever see $40,000 again?

Focusing too narrowly on pullbacks can miss the big picture. Here’s an example: Let’s say you’re a terrible market timer; you bought at the absolute peak of the last cycle, on November 10, 2021, when Bitcoin hit $68,780. Then the price of Bitcoin fell straight below $17,000. What terrible luck, right? You probably feel stupid. But let’s say that, despite your poor timing, you held on to that position until today.

Your gain would be over 42%, beating the S&P 500 over the same period.

Or what if you bought Bitcoin during the 2017 frenzy, when it peaked at $19,217, before falling all the way to just over $3,000?

But if you had held on today, you would have gained more than 400%, more than double the S&P 500's return of about 150%.

The temptation to try to time the market is great. But if you think an asset will go up 5x or 10x—and you’re only betting a small portion of your portfolio on it—does it really matter if your timing is perfect?

As the old adage goes: it’s time in the market, not timing the market, that counts, and it always is.

Let me end with a story: I remember the first time I heard about Bitcoin. It was the day Bitcoin first broke through $1. I was leading a team of young financial analysts at a traditional financial company at the time, and we had a one-hour meeting to discuss this new innovation.

I didn't have time to buy it that day. I was busy and I thought it might be too late.