Is Bitcoin a Buy Right Now?

After topping out at over $124,000 per token last October, Bitcoin (CRYPTO: BTC) has plunged about 28% and is currently trading slightly below $90,000. While the drop is certainly unwelcome to current holders, this is not new territory for Bitcoin investors.

Bitcoin has been extremely resilient in its short life, rebounding from numerous drawdowns of over 50% and even 90%. The world's largest cryptocurrency is still up nearly 180% over the past five years. However, in recent months, the token has faced concerns about the economy, the trajectory of interest rates, and even the possibility that quantum technology will eventually become a significant competitor to blockchain.

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Additionally, some large holders of the token, known as Bitcoin whales, have sold significant portions of their holdings. Is Bitcoin a buy right now?

The environment is still favorable

Predicting what will happen to any cryptocurrency in the near term is incredibly difficult. But if I assess the current environment, I would argue it remains favorable to Bitcoin.

President Donald Trump has ushered in an incredibly friendly regulatory regime. Under his guidance, Congress has passed significant legislation intended to clear up regulatory gray areas. Trump also created a U.S. Strategic Bitcoin Reserve and is making it easier for retirement accounts to purchase assets like Bitcoin.

Furthermore, one of the main arguments for Bitcoin is that it is a form of digital gold, primarily due to its 21 million finite tokens, most of which are already in circulation. The price of gold has absolutely exploded, as investors grow increasingly concerned about mounting U.S. debt and the further debasement of the U.S. dollar.

Finally, the Trump administration's openness to crypto should enable more institutional investors to invest in the token and more large, mainstream banks and financial institutions to offer crypto services, both of which should be bullish for Bitcoin.

At this moment, I can't say for certain whether Bitcoin is truly a form of digital gold, because the token often trades like a high-beta tech stock. However, it has previously traded with a correlation to gold, and I think enough investors believe in the concept that it could be true.

Given this thesis and the regulatory environment, I remain bullish on Bitcoin in the long term. More importantly, I think it could provide a unique form of diversification in a multi-asset portfolio, which is why investors may want to allocate at least a small percentage of their portfolio to Bitcoin. If you own the token, however, be prepared for volatility.

There's still likely much that investors do not understand about Bitcoin and crypto, given that the sector is only about 15 to 20 years old.

Bram Berkowitz has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.