Bitcoin's (CRYPTO: BTC) price breaking $100,000 for the second time seemed like a bullish milestone. But will its price stay above that level for the long term? And if it does, why?
Bitcoin's (CRYPTO: BTC) price breaking $100,000 for the second time seemed like a bullish milestone. But will its price stay above that level for the long term, and if it does, why?
There are three emerging trends in particular that suggest $100,000 may become the new floor for the coin rather than a peak. Let's take a look at each.
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1. Even more governments are thinking about forming reservesYou may have heard that President Donald Trump issued an executive order calling for the creation of a Strategic Bitcoin Reserve. Although it has yet to be created, the U.S. isn't the only country that's looking to stockpile digital assets like Bitcoin; Japan, Russia, and the Czech Republic, among many others, are also investigating whether to create reserves of their own. In fact, many more are either resolving to form repositories, or evaluating whether it makes sense for them to do so.The latest nation to signal that a Bitcoin reserve policy may be in the near future is Latvia. On May 13, the Latvian minister of economics, Viktors Valainis, said that "a national strategic Bitcoin reserve is only a matter of time," though it's important to note that there isn't currently any law under consideration that would implement such a reserve. The minister also proposed that the country's pension system might buy and hold the coin.Image source: Getty Images.Whether Latvia ends up moving forward with these policies, the picture is clear: Bitcoin is an asset of significant interest to governments. Many of those governments will need to either hold the coins they seize via asset forfeitures or buy them directly on the market. Either way, there will be less supply to go around, which will force prices higher.2. Cities may soon be buyingCity governments are also showing interest in holding Bitcoin on their balance sheets. In late April, Panama City, a major global financial hub, resolved to establish a strategic Bitcoin reserve. The idea is that holding the coin will help hedge the city's finances against inflation and economic instability.Other important cities in the cryptocurrency industry, like Hong Kong, are as of late 2024 evaluating proposals to include the coin in their supply of foreign reserves. New York City's Mayor Eric Adams has also floated the idea of a municipal Bitcoin reserve. And these places won't be the last.But most cities aren't as advanced in the process as Panama City. That means they might need to buy Bitcoin in the near future rather than today. And if they're willing to discuss buying the coin when it's above $100,000, as it is right now, they will probably be willing to discuss buying it even higher, which will support the price floor.3. Bitcoin treasury companies are emergingThe last bullish trend for Bitcoin is the birth of Bitcoin treasury companies that aim only to buy and hold the coin as their primary business model.Aside from the fact that these businesses are obligatory buyers (assuming they want to be able to pass on a return to their investors), they also tend to be large buyers because they're able to lean on both debt and equity as sources of capital to fund their purchases. They will likely also prefer to be long-term holders because their net asset value will decline sharply if they sell any of their coins, harming the value of their stock in the process.The biggest Bitcoin treasury business, Strategy (NYSE:MSTR), holds nearly $60 billion of the coin. That's a lot being kept out of circulation, and it's in the hands of just one company. As more of these companies emerge, it will constrain the float of the coins available for public trading even further, sending prices higher as buyers compete to secure a portion of what's left over.And that's quite bullish.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.Consider when Netflix (NASDAQ:NFLX) made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,you’d have $620,719!* Or when Nvidia (NASDAQ:NVDA) made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation,you’d have $829,511!*Now, it’s worth noting Stock Advisor’s total average return
