When Bitcoin (CRYPTO: BTC) hit a new all-time high of $111,970 on May 22, many investors were convinced that the world's most popular cryptocurrency was about to go on another epic run. But that hasn't been the case.

In fact, Bitcoin pulled back to $105,000, and could even fall below $100,000 again. Should investors be concerned?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Bitcoin's volatility

For much of its history, Bitcoin has been a very risky and volatile asset. In its early days, volatility was sky-high, and the price of Bitcoin tended to move up and down in jagged spikes.

However, Bitcoin is becoming less volatile over time. All you have to do is look at a chart of Bitcoin's volatility over the past decade. The change in volatility in recent years is striking.

According to data from CoinGlass, a cryptocurrency information site, Bitcoin's 30-day volatility during the previous crypto bull market rally of 2020-2021 ran as high as 9%. However, Bitcoin's volatility has been declining over the past two years. In May 2025, Bitcoin's 30-day volatility dipped below 2%.

Image source: Getty Images.

This might be surprising, especially given this year's news cycle around trade, tariffs, and U.S. macroeconomic policy. Most investors likely assume that Bitcoin has been wildly volatile over the past five months, but that simply hasn't been the case.

And there's a good reason for this: Bitcoin is going increasingly mainstream. The more institutional investors and corporations line up to buy Bitcoin, the less volatile it will become over time. Short-term, speculative money is being crowded out by long-term, buy-and-hold money.

Thus, there's less reason to be worried about Bitcoin's recent pullback than there might have been in the past. By now, everyone realizes that Bitcoin is not going to zero. The prudent strategy now is to view Bitcoin as a long-term investment that will soar in value over the next decade.

Buy the dip

If anything, the pullback in Bitcoin is a signal to buy more, at a lower price. In crypto parlance, this is known as buying the dip. Any time Bitcoin falls by 10% or more, the thinking goes, you should scoop up Bitcoin at a new bargain price.

And, by and large, that is what has been happening this year. The easiest way to see this is with investor inflows into the spot Bitcoin exchange-traded funds (ETFs). While there was a brief period in April when Bitcoin inflows slowed to a halt and then reversed, money is once again flowing into the Bitcoin ETFs.

One big narrative that has emerged in 2025 is the willingness of both retail and institutional investors to buy the dip in Bitcoin, even at fantastically high prices. The reason is simple: In 10 of the past 13 years, Bitcoin has been the best-performing asset on the planet.

Even after massive market declines, like we saw in 2022, Bitcoin has always bounced back, better than before. In January 2023, Bitcoin was in the doldrums, trading for less than $17,000. Investors were warning that this was finally the end for Bitcoin. Just two years later, Bitcoin topped $100,000. The historical resilience of Bitcoin can't be dismissed anymore.

How much higher can Bitcoin go this year?

The good news is that Bitcoin might soar much higher in 2025. According to data from online prediction markets, Bitcoin has a 61% chance of hitting $125,000 this year. It has a 30% chance of hitting $150,000 this year. And it has a 12% chance of reaching $200,000 in 2025.

That basically lines up with what major Wall Street investment firms were predicting earlier in the year. In January, a popular prediction to make was that Bitcoin would double in value, to hit $200,000 this year.

All of this leads me to think that Bitcoin investors shouldn't be worried about the recent pullback. As long as money continues to flow into the spot Bitcoin ETFs, the overall upward trajectory should continue. While there's no guarantee that Bitcoin will double in price this year, there's a good chance it will hit yet another all-time high within the next six months.

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 made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

It's been a strange year for the crypto market. After a hot start to 2025, every major cryptocurrency continues to be whipsawed by the constant ups and downs of tariffs and global trade.

What can investors expect in the second half of the year? According to the new Motley Fool Money 2025 Cryptocurrency Investor Trends Survey, investors remain bullish on the future prospects of crypto, especially Bitcoin (CRYPTO: BTC). Let's take a closer look.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Bitcoin could double in value in 2025

Bitcoin has been front and center throughout the year. Even with the volatility of the current tariff situation, investors remain very bullish about the cryptocurrency's prospects.

Image source: Getty Images.

According to the Motley Fool Money 2025 Cryptocurrency Investor Trends survey, 68% of U.S. adults who currently hold crypto in their portfolio think that Bitcoin could hit $200,000 by the end of 2025. Based on its current price of $105,000, that suggests that Bitcoin could double in value over the next six months.

Even U.S. adults who don't own crypto in their portfolios are surprisingly bullish about Bitcoin. For example, 25% of them also think that Bitcoin could hit $200,000 by the end of 2025. Another 49% are undecided. Only 26% think it's unlikely.

As a result, investors are likely to continue to buy the dip for the rest of the year. Anytime Bitcoin loses 10% or more of its value, they'll view it as a buying opportunity. And, indeed, this is what we've already seen in the first half of the year, with money continuing to flow into the spot Bitcoin exchange-traded funds (ETFs) from retail investors.

Solana and XRP could rally if new ETFs are approved

Currently, only Bitcoin and Ethereum (CRYPTO: ETH) have spot ETFs. However, one big story of the year has been the potential for other major cryptocurrencies to get spot ETFs of their own. Two that are often mentioned are Solana (CRYPTO: SOL) and XRP (CRYPTO: XRP).

These new spot ETFs could be a game changer. They make buying crypto as easy as buying your favorite tech stock. You can open up an app on your phone, hit a button, and get exposure to Bitcoin instantly. According to the Motley Fool Money crypto survey, "I don't understand how to buy it" remains one of the major barriers to investing in crypto, and spot ETFs help solve this problem.

That leads me to think there will be a rally in Solana and XRP later in the year. That's when the SEC is scheduled to sign off on new spot ETF applications for both cryptos. As soon as these start trading, it could lead to a wave of new investor money flowing into them.

Ethereum may continue to underperform

Ethereum is still the world's second-largest cryptocurrency, and continues to be an important part of the White House's crypto strategy. So why does Ethereum continue to lag the market? Even after a mini-rally in May, Ethereum is still down 20% for the year.

By parsing the data and responses in Motley Fool Money's crypto survey, I might have uncovered the answer: Investors just don't like Ethereum. They can't figure out what to do with it, and it doesn't generate the sort of big, splashy news headlines that can grab their attention.

According to the survey, 36% of respondents who don't own crypto said they "don't know what to do with it." Overall, only 11% of respondents said they understood how crypto works. Bitcoin is easy to explain -- it's "digital gold." But what, exactly, is Ethereum?

Moreover, survey respondents appeared to show a clear preference for big, splashy news headlines. For example, as soon as Bitcoin hit the $100,000 price level, it immediately helped to pull in investors who might have otherwise ignored crypto. Bitcoin hitting $100,000 is the type of headline that's tailor-made to float across the chyron of a TV.

Or, take the example of Elon Musk joining the Trump administration earlier this year. Even though Musk had no direct role in the White House's crypto policies, the overwhelming sentiment of survey respondents was that just having him aboard would somehow be good for crypto.

Ethereum hasn't been able to deliver anything close to a splashy $100,000 news headline or a high-profile public figure like Elon Musk. The biggest news this year has been a new blockchain upgrade in May. As a result, investors just aren't interested. Ethereum may continue to underperform the market until a new narrative emerges.

What happens next for crypto?

In the crypto market, sentiment can change on a dime. Now that Musk has left the White House, for example, will investors become more or less bullish on crypto? And how long are investors willing to wait for Bitcoin to double in value, if it shows signs of stumbling over the summer?

That being said, the new Motley Fool Money crypto survey is a great temperature check on what crypto investors are thinking right now. Using the survey response data, it's possible to put together some compelling narratives about where Bitcoin, Ethereum, Solana, and XRP might be headed in the second half of 2025.

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 made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Dominic Basulto has positions in Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.

The hottest crypto stock on the planet right now is Circle Internet Group (NYSE: CRCL), which debuted on the New York Stock Exchange on June 5. In its first day of trading, Circle was up nearly 170%. At one point, Circle was up more than 200%, and trading was halted several times, as the market struggled to keep up with demand.

There are only a handful of pure play crypto stocks right now for investors, and Circle might end up being the best of them. So what is Circle, and why should it be in your portfolio?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Stablecoins

Circle is a direct play on the surging stablecoin industry, which is now valued at over $250 billion. Circle's stablecoin is USDC (CRYPTO: USDC), which currently has a $60 billion valuation, making it the 7th largest cryptocurrency in the world by market cap.

Thus, by getting exposure to Circle, you are getting exposure to a company that controls 25% of the rapidly growing stablecoin industry via USDC.

Image source: Getty Images.

The easiest way to think about stablecoins is that they are "digital dollars." They are typically pegged 1:1 to the U.S. dollar, and that makes them very useful as an on-ramp to the world of blockchain finance. Institutional investors are increasingly using them to move money into crypto.

Thus, the surge in the stablecoin industry over the past five years can be seen as part of a broader trend: the shift from "physical dollars" to "digital dollars" and the growing mainstream appeal of crypto.

Stablecoins have even attracted the attention of the U.S. Treasury Department, which is now viewing them as a potential policy tool to support the U.S. dollar. In one scenario that has been discussed, stablecoins might also be used to reduce the amount of interest the government pays on its debt.

Circle's growth potential

As you might have guessed by now, Circle's future growth potential is off the charts. In Ark Invest's "Big Ideas 2025" report, CEO Cathie Wood dedicated an entire section to stablecoins and their potential to reshape the financial world. The numbers are just jaw-dropping.

In 2024, for example, annualized transaction value of stablecoins hit $15.6 trillion, far surpassing the transaction values of both Visa (NYSE: V) and Mastercard (NYSE: MA). While both credit card issuers still have significantly more transaction volume, they are now behind when it comes to transaction value.

The profit-making potential of stablecoin issuers such as Circle is also noteworthy. These stablecoin issuers make money on the dollar reserves used to support their stablecoins. Typically, they take their dollars, and then invest them in low-risk assets such as U.S. Treasury bills. This creates an incredibly capital-efficient business model that churns out profits.

Over time, Ark Invest expects stablecoins to become a bigger and bigger part of the global financial system. That will create more and more opportunities for Circle.

But what about competitors?

Just keep in mind: Circle is not the only company involved in stablecoins. Its primary competitor is Tether (CRYPTO: USDT), which is considerably larger. In fact, Tether has a market cap of $154 billion, which represents roughly 60% of the total value of the stablecoin market.

There are plenty more competitors on the way, given just how lucrative the business is. For example, World Liberty Financial, the crypto venture affiliated with the Trump family, recently launched a stablecoin of its own earlier this year. It now has a market cap of $2 billion, meaning it now ranks among the top 40 cryptocurrencies in the world.

Moreover, stablecoins are a truly global industry. As Ark Invest points out in its report, new euro-pegged and yen-pegged stablecoins are now starting to pop up. While dollar-pegged stablecoins currently represent 98% of total stablecoin supply, it's easy to see how that percentage could decline over time, especially if global trade pressures intensify.

Millionaire-maker potential

So does Circle have millionaire-maker potential? If you look at the phenomenal growth of the stablecoin industry over the past five years, it's hard to think that it does not. In June 2020, the total value of the stablecoin industry was approximately $10 billion. Today, it's $250 billion. So it has grown 25x over a period of just five years.

By way of comparison, the price of Bitcoin (CRYPTO: BTC) in June 2020 was $10,000, and today it is over $100,000. So, while Bitcoin is growing at a multiple of 10x, stablecoins are growing at an even more rapid rate of 25x. Impressive, right?

If you think Bitcoin has millionaire-maker potential, then so does Circle. There's a good reason why Circle was the most highly anticipated crypto IPO since Coinbase Global (NASDAQ: COIN) in 2021. It's simply one of the best pure play crypto stocks out there, with potentially stratospheric future growth potential ahead.

Should you invest $1,000 in Circle Internet Group right now?

Before you buy stock in Circle Internet Group, 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 Circle Internet Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Dominic Basulto has positions in Bitcoin, Circle Internet Group, and USDC. The Motley Fool has positions in and recommends Bitcoin, Mastercard, and Visa. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.

Now that Elon Musk is finally leaving the Trump administration, it's time to forget about Dogecoin (CRYPTO: DOGE). While there was hope earlier in the year that the billionaire tech titan might be able to help push up the price of this meme coin, that simply hasn't happened. For the year, Dogecoin is down a whopping 40%.

But all hope is not lost. There are plenty of other options if you are looking for a low-cost, high-upside cryptocurrency. My favorite pick right now is XRP (CRYPTO: XRP), which is up a modest 6% for the year. Here's why you should consider it for your portfolio.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Utility coin vs. meme coin

Dogecoin has always been -- and always will be -- a meme coin. Moreover, it was created as an internet joke, so it was never meant to be serious. The only way Dogecoin can increase in value is through hype, buzz, and speculation.

Musk's brief tenure in the White House is proof of that. Even though he had no direct role in any of the White House's crypto policies, the mere fact that he created a government-adjacent group called DOGE -- the same as the ticker symbol for Dogecoin -- created quite a bit of hype and speculation that something big might be coming for Dogecoin. But nothing ever did.

Image source: Getty Images.

In contrast, XRP has real utility. In other words, you can actually use it for something of value. XRP is primarily used as a bridge currency. As such, it can be used to facilitate cross-border transactions, as well as to convert one fiat currency (such as the U.S. dollar) into another fiat currency. All of this runs on the XRP blockchain, and is supported by Ripple Labs, a San Francisco-based tech company that has been around since 2012.

XRP's blockchain technology has already been embraced by large financial institutions as a way to move money around the world in a way that is cheaper and faster than with traditional financial tools. Ripple CEO Brad Garlinghouse has even suggested that the XRP payment network might eventually become even bigger than SWIFT, as it is adopted by more and more global institutions.

Higher upside potential

During the previous crypto bull market rally, Dogecoin soared in value seemingly overnight. It was the first-ever meme coin, and investors piled into it, hoping to become crypto millionaires.

But that was four years ago. In May 2021, Elon Musk appeared on NBC's Saturday Night Live at exactly the moment when many people thought Dogecoin was headed to the moon.

Dogecoin never made it to the moon. In fact, it couldn't even reach escape velocity. Dogecoin reached an all-time high of $0.74, and never recovered. Today, it's trading for $0.20. Never once in its history has it ever broken the $1 mark.

In contrast, XRP has already shown its tremendous upside potential. Yes, it was flatlining around the $0.50 mark for much of 2024, but it then suddenly went parabolic after the U.S. presidential election. At one point, it was up as much as 600% after the election.

Granted, XRP has cooled off considerably since then. It's now trading for just $2, and is down nearly 35% from its 52-week high earlier in the year. But it's still one of the only top cryptocurrencies up for the year.

Analysts and investors remain bullish on XRP's long-term prospects. It could easily double in value, to regain its all-time high of $3.84. Some even think XRP might soar in value to $10 or higher.

Sell Dogecoin, buy XRP

I get the allure of Dogecoin -- it's cheap and it's fun. But investing in Dogecoin just doesn't make sense, especially when it's down 40% for the year. At a time of maximum global macroeconomic uncertainty, the last thing smart investors want to be holding is a dog-themed meme coin with a funny name.

A better option would be XRP, which is still relatively cheap -- just $2, less than a cup of coffee these days! And, at times, XRP trades much like a meme coin. Just a hint or whisper of something big coming for XRP is often enough to send it higher. But at least XRP has some utility to it, and has much higher upside than Dogecoin over the long haul. If you are choosing between XRP and Dogecoin, this one's a no-brainer.

Should you invest $1,000 in XRP right now?

Before you buy stock in XRP, 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 XRP wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Dominic Basulto has positions in XRP. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.

Heading into 2025, XRP (CRYPTO: XRP) was the hottest crypto on the planet. But after hitting a 52-week high of $3.39 in January, XRP has fizzled out. It's now down 35% from its 2025 peak, and investors are understandably concerned.

Is now the time to buy the dip on XRP? Or is your money better spent elsewhere? Let's take a closer look.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Pro-crypto euphoria

Heading into November, XRP had basically flatlined at the $0.50 price level. However, after the presidential election, it suddenly surged, eventually reaching a multi-year high.

This makes sense, of course, because XRP was the one cryptocurrency destined to get the biggest bounce from a pro-crypto Trump presidency. Up until November, dark regulatory clouds were hanging over Ripple, the company behind the XRP token. The Securities and Exchange Commission (SEC) claimed that XRP was a "security" and not a "commodity." This asset class is subject to stricter regulations regarding trading, ownership, and reporting requirements.

However, as soon as Trump was elected, XRP skyrocketed. The logic was simple: a Trump presidency would likely lead to a shakeup at the SEC, which would then help lift all the regulatory clouds hanging over Ripple and XRP. And that's exactly what happened.

The problem is that this development has been replaced by a new narrative around global trade and tariffs. All of last year's pro-crypto euphoria has already been priced into XRP, and investors are looking for a new narrative to drive XRP higher.

Spot ETFs incoming

The most likely new catalyst is SEC approval of spot XRP exchange-traded funds (ETFs). Already, there are several spot XRP ETF applications in the pipeline, including ones from Franklin Templeton (NYSE: BEN) and WisdomTree (NYSE: WT).

The thinking here is that a new pro-crypto approach at the SEC will give it the freedom to sign off on at least one of these ETF applications. The timing has been pushed back to the fourth quarter (Q4), but prediction markets are giving this a 93% chance of happening by the end of 2025. It's almost just a matter of "when," not "if."

Image source: Getty Images.

If the success of the spot Bitcoin ETFs is any guide, then these new spot XRP ETFs could result in a tsunami of new investor money flooding into XRP, helping to push up its price.

XRP as a treasury asset

As further proof of just how mainstream XRP has become, some publicly traded companies are now thinking about adding XRP as a treasury asset to their balance sheets. This is a strategy that was first popularized with Bitcoin (CRYPTO: BTC), and now it looks like the same strategy could be coming for XRP as well.

One example is sustainable energy producer VivoPower International (NASDAQ: VVPR), which plans to buy $100 million of XRP for its treasury. And a Chinese company recently filed with the SEC to buy $300 million of XRP for its treasury. It remains to be seen if other companies will follow their lead, but XRP bulls are understandably enthusiastic about this development. The coin was never meant to serve as a long-term value storage system, but XRP investors aren't complaining about this new idea.

But what about the fundamentals?

That's the good news. The bad news, unfortunately, is that usage of the XRP token has fallen off a cliff over the past two months. As demand for XRP falls, it means that there will likely be downward pressure on its price.

Keep in mind: XRP is essentially a bridge currency. That means it's primarily used to facilitate cross-border payments and transfer value between different fiat currencies. Typically, users convert one fiat currency into XRP, send it across the XRP blockchain to a user in another country, who then converts it into another fiat currency. It might sound complex, but it's cheaper and more efficient than using traditional finance tools.

However, now that global trade has been turned upside down, the growing consensus is that XRP may no longer be as needed as it once was. After all, who's sending money across borders these days? That could help to explain why the fall in demand for XRP has been so dramatic over the past two months. This time period lines up perfectly with the announcement of the Liberation Day tariffs on April 2.

Stablecoins vs. XRP

Moreover, there appears to be another factor at work here, and that's the emergence of stablecoins as yet another way to send cross-border payments. Stablecoins are now a $250 billion industry, and it's clear that they are here to stay.

In fact, Ripple recently launched a stablecoin of its own. While it was originally intended to help stoke demand for XRP, this stablecoin could end up cannibalizing some of the transaction activity of XRP, further reducing demand for the token.

And that, of course, is going to further keep a lid on future price gains for XRP. In fact, a growing number of investors are now warning that XRP could drop below the $2 mark soon.

Should you buy XRP?

The decision of whether or not to buy XRP is more complicated than you might think. While there are definitely near-term catalysts waiting to send XRP higher, it all comes amid a backdrop of macroeconomic uncertainty.

Thus, before you decide to buy XRP, you need to be comfortable with the current situation involving global trade and tariffs. Even though XRP has enormous upside potential going forward, it may continue to trade sideways until the tariff situation is resolved once and for all.

Should you invest $1,000 in XRP right now?

Before you buy stock in XRP, 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 XRP wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

Now, it’s worth noting Stock Advisor’s total average return is 789% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Dominic Basulto has positions in Bitcoin and XRP. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool recommends WisdomTree. The Motley Fool has a disclosure policy.

During the past five years, MicroStrategy (NASDAQ: MSTR) stock is up almost 2,900%. No other company even comes close. Nvidia, for example, is up a little more than 1,400% during that same time period.

What's particularly remarkable about the performance of MicroStrategy, which is now doing business as Strategy, is that it is based almost entirely on its relentless accumulation of Bitcoin (CRYPTO: BTC). The more Bitcoin Strategy buys, the higher its stock price goes.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

As a result, a number of companies are now jumping into the fray, attempting to become "the next Strategy" by embarking on Bitcoin buying campaigns. But do they even have a chance?

The rise of the Bitcoin treasury company

Strategy now holds 580,250 Bitcoins, making it by far the largest corporate holder of Bitcoin in the world. By way of comparison, the next largest corporate holder of Bitcoin is MARA Holdings (NASDAQ: MARA), a Bitcoin mining company, which holds 48,137 Bitcoins.

Image source: Getty Images.

Strategy has gone all-in on its Bitcoin business model. In fact, in February, it rebranded itself as a Bitcoin treasury company. Essentially, this is a company that does nothing but buy Bitcoin. Even though Strategy still has a legacy enterprise software business, that's pretty much an afterthought these days.

If you go to the homepage for Strategy, it's hard even to find a mention of its software offerings. The entire website has been transformed into a Bitcoin dashboard.

Admittedly, the numbers are head-spinning. During the past 12 months, Strategy is up 139%. Bitcoin is up 53%. Gold is up 40%. Nvidia is up 22%. The only corporation that has even come close to Strategy's performance is Tesla, which is up 94%.

Potential rivals to Strategy

Potential Strategy rivals have a tall task ahead of themselves. They have to start buying Bitcoin at a hefty price of more than $100,000, and that requires a huge war chest. Strategy started its Bitcoin acquisition buying five years ago, when the price was much lower.

That said, there's one potential rival that's generating a lot of buzz these days, and that's Twenty One Capital. Most likely, you've never heard of the company, and for good reason. It only opened at the end of April, so it's only been around for a month.

In that brief time span, Twenty One Capital has managed to acquire 31,500 Bitcoins, making it the third-largest corporate holder of Bitcoin in the world. It has gone from zero to $500 million in 30 days.

You might be scratching your head here. If a single Bitcoin costs upward of $100,000, how did this company manage to snatch up 31,500 of these expensive coins in such a short period of time? The answer is simple: It has some friends with deep pockets.

Twenty One Capital launched with the support of Tether, the world's largest stablecoin, and SoftBank, the Japanese tech behemoth. It planning to go public with the help of Wall Street firm Cantor Fitzgerald, which had a SPAC (special purpose acquisition company) just waiting to be put to work.

There are more Bitcoin treasury companies on the way. For example, former presidential candidate Vivek Ramaswamy recently said he plans to convert one of his companies into a Bitcoin treasury company. Every day, it seems, there's a new company that's ditching its previous business model and going all in on becoming a Bitcoin treasury company.

What could possibly go wrong?

The Bitcoin treasury company playbook seems easy to follow: Buy Bitcoin, see your stock price soar. As long as the price of Bitcoin continues to go up, this could be a very profitable strategy. Things get dicier, however, if the price of Bitcoin ever falls. All of a sudden, any company holding Bitcoin on its balance sheet is going to have to take huge write-downs every quarter.

Moreover, the stakes continue to rise. As Bloomberg points out, in order to one-up Strategy, you need to do something new. It is no longer enough just to buy up as much Bitcoin as you can -- you now need to do something with it to create additional value. At a minimum, you need to outperform Bitcoin by at least a slight margin, otherwise investors will simply move their money into relatively safe spot Bitcoin exchange-traded funds (ETFs).

Should you buy Strategy?

If 2024 was the year that Bitcoin went mainstream, 2025 might be the year that the Bitcoin treasury company goes mainstream. I'm keeping a close eye on which new corporations are buying Bitcoin, as well as what their strategies are for outperforming Bitcoin over the long haul.

For now, Strategy is still the best option. You really can't argue with a company that is outperforming every single Magnificent Seven stock, and even Bitcoin itself. But, with the arrival of so many new Bitcoin treasury company copycats, it remains to be seen how much longer Strategy can remain the market leader.

Should you invest $1,000 in Strategy right now?

Before you buy stock in Strategy, 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 Strategy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $828,224!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin, Nvidia, and Tesla. The Motley Fool has a disclosure policy.

On news of positive developments on the global trade front, Bitcoin (CRYPTO: BTC) once again regained the $100,000 price level. The euphoria in the crypto market was palpable, and just about every top cryptocurrency moved higher as soon as the first trade deal was announced.

The new thinking is that Bitcoin is about to go on another one of its famous bull market runs, taking it to new all-time highs. But is that really the case?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Macroeconomic outlook

While the White House's announcement of a new trade deal with the U.K. is certainly reason for optimism, a closer reading of the "deal" reveals that it is really more of an agreement, and that tariffs are not going away.

Moreover, as skeptics are pointing out, Great Britain accounts for only a small percentage of all U.S. trade, and the U.S. actually has a trade surplus with Great Britain. On the other hand, signing the first trade deal with a key Asian trading partner, with whom the U.S. had a trade deficit, would have been much more bullish.

Image source: Getty Images.

It's also been less than 48 hours since Fed Chairman Jerome Powell warned of slowing economic growth and higher prices as a result of tariffs. We haven't seen any direct economic effects from the tariffs yet, but the warning signs on the horizon are ominous. If dozens of new trading deals aren't signed within the next 60 days, any gains in Bitcoin could be fleeting.

Institutional adoption

However, the case for Bitcoin entering a new bull market cycle becomes much stronger when you consider the pace of institutional adoption. The best way to see institutional adoption in action is by looking at investor inflows into the spot Bitcoin ETFs. These inflows turned negative during the peak of tariff uncertainty, but have since turned positive.

In fact, there's now more money flowing into the spot Bitcoin ETFs than into gold ETFs. That's particularly striking, given that gold has outperformed Bitcoin this year. Gold is also the one safe haven asset that you typically want to be holding during times of economic and geopolitical uncertainty. So it speaks volumes that investors now appear to be buying more Bitcoin than gold.

You can also measure the pace of institutional adoption by tracking the growing number of corporations adding Bitcoin to their balance sheets. Leading the way is MicroStrategy (NASDAQ: MSTR), the company now doing business as Strategy, which continues to load up on Bitcoin. There are also a growing number of "MicroStrategy copycats," which are following the same strategy of buying as much Bitcoin as they can.

Where are we in the Bitcoin cycle?

A new infusion of global liquidity, combined with a sea change in investor sentiment, can certainly push Bitcoin higher in the short term. But for how long?

To answer that question, it's important to know where we are in the Bitcoin cycle. Historically, Bitcoin follows a well-documented four-year cycle, which leads to periods of "boom" and "bust." The four-year cycle is more than just a statistical oddity -- it follows from the fact that Bitcoin has a halving event every four years.

Based on data from three previous Bitcoin cycles, the halving typically leads to a 12- to 18-month period of bullish activity and outsized market gains. So, as an investor, all you have to do is take the date of the last halving, add on anywhere from 12 to 18 months, and presto! You have a pretty good idea of when the bull market cycle is going to end. The ending of the bull market cycle typically happens with a "blowoff top" -- a massive frenzy of speculative froth and market euphoria, followed by a steep market correction.

That's what has me worried right now. The last Bitcoin halving took place in April 2024, more than 12 months ago. So, if history is any guide, then we are quickly approaching the end of the current Bitcoin cycle. If the period of bullish activity lasts for the full 18 months, there could be a speculative frenzy of Bitcoin buying activity until November.

This could lead to a repeat of what happened four years ago. In November 2021, Bitcoin hit a then all-time high of $69,000 and seemed to be headed to the moon. It never made it there. The crypto rocket ship never reached escape velocity, and Bitcoin soon collapsed below $16,000.

Buy Bitcoin for the long haul

Investors need to commit to buying Bitcoin for the long haul. I can't emphasize this enough: If you are only buying Bitcoin for the potential short-term gains, you are doing it all wrong.

Bitcoin is highly volatile, and so goes through boom-and-bust cycles. It's exciting when Bitcoin is in the "boom" part of its cycle, but you need to be ready to ride out the "bust" part of the cycle as well. We've seen this story before with Bitcoin, and it always ends the same way.

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 made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $714,958!*

Now, it’s worth noting Stock Advisor’s total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 5, 2025

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

Let's be perfectly clear: Ethereum (CRYPTO: ETH) is having a very bad year. It's now down 47% in 2025, making it the worst-performing top cryptocurrency. At a time when rival cryptocurrencies are finally starting to regain momentum, Ethereum is down another 10% over the past 30 days.

So is it time to give up on Ethereum? Or is there still hope that it can somehow turn things around? Let's take a closer look.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Ethereum's competitors

Of foremost concern, Ethereum no longer looks as formidable as it did even 12 months ago. Upstart rivals continue to proliferate, and there are now four direct competitors -- Solana (CRYPTO: SOL), Cardano (CRYPTO: ADA), Avalanche (CRYPTO: AVAX), and Sui (CRYPTO: SUI) -- that are taking market share away from Ethereum.

All five of these competitors boast market caps of $9 billion or higher, all of them now rank among the top 20 cryptocurrencies in the world, and all of them are performing better than Ethereum this year. Moreover, if you look outside the Top 20, there are plenty more smaller competitors, many of them focusing on a specialized niche of the blockchain world that Ethereum once had the potential to dominate.

Ethereum's existential crisis

So this rapidly changing competitive landscape is one obvious reason why Ethereum's crypto price continues to tank. It's no longer enough for Ethereum to roll out a new blockchain upgrade every year and expect investors to be impressed.

Moreover, Ethereum appears to be experiencing an existential crisis right now. At the beginning of the year, there were even signs that Vitalik Buterin, the legendary co-founder of Ethereum, might actually quit and hand over the reins to someone new.

Image source: Getty Images.

At the same time, developers within the Ethereum blockchain ecosystem are squabbling over its future direction. And there has already been a big leadership shakeup this year at the Ethereum Foundation, the nonprofit organization responsible for guiding the future direction of Ethereum.

Adding insult to injury, some blockchain competitors are now raising the question of whether Ethereum will even exist a decade from now. Charles Hoskinson, one of the co-founders of Ethereum who went on to launch rival Cardano, recently suggested that Ethereum is running out of time and is in imminent danger of becoming the next MySpace or BlackBerry.

There's too much competition, Hoskinson says, and Ethereum is at real risk of losing its foothold in decentralized finance (DeFi), the one area where it has been historically dominant. Moreover, economic value is rapidly flowing away from Ethereum (the Layer 1 blockchain) to new blockchain scaling solutions (the Layer 2 blockchains) that are designed to help Ethereum run faster and more efficiently. Investors are waking up to this reality and significantly marking down their price forecasts for Ethereum.

The Trump factor

All of this, of course, is the reason for doom and gloom about Ethereum. However, there is one silver lining: the Trump White House still thinks Ethereum is core to the growth of the blockchain and crypto sector and is devoting considerable resources to propping it up. For example, it made Ethereum a centerpiece of the new U.S. Digital Asset Stockpile, and World Liberty Financial, the crypto company affiliated with the Trump family, has been buying Ethereum for its own portfolio.

It's up to you to decide, of course, whether these efforts are going to help. For example, take the U.S. Digital Asset Stockpile. Yes, it commits the U.S. Treasury to consolidate the government's holdings of Ethereum. But it does not commit the U.S. Treasury to buy new Ethereum, which is what investors were hoping for. Any large-scale buying of Ethereum by the U.S. government, of course, could send its price soaring.

Only buy Ethereum if this one thing happens

At the end of the day, it's almost impossible to recommend Ethereum these days. And that's really a shame because Ethereum has been a star performer for nearly a decade. It remains the second-largest cryptocurrency in the world and is one of the few cryptocurrencies widely held by both large institutional investors and small retail investors.

But here's the thing: Digital assets need to be valued based on their future growth projections and not on past accolades or past performance. There are simply too many competitors these days, and Ethereum is starting to lag its biggest rivals. Unless the Trump White House commits to a full-scale buying of Ethereum as a national strategic asset, there are better investment targets elsewhere.

Should you invest $1,000 in Ethereum right now?

Before you buy stock in Ethereum, 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 Ethereum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 28, 2025

Dominic Basulto has positions in Cardano, Ethereum, Solana, and Sui. The Motley Fool has positions in and recommends Avalanche, Cardano, Ethereum, Solana, and Sui. The Motley Fool has a disclosure policy.

Only a handful of cryptocurrencies, such as Bitcoin (CRYPTO: BTC) and XRP (CRYPTO: XRP), have been able to avoid the worst of the declines in response to President Donald Trump's new tariffs.

Most top cryptocurrencies are down at least 20% for the year, with two major categories of cryptocurrencies -- Layer 1 blockchain networks and meme coins -- getting slammed especially hard. Let's take a closer look to see whether any of these beaten-down cryptos might be worth buying right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Layer 1 blockchain networks

Layer 1 blockchain networks, such as Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), Cardano (CRYPTO: ADA), Sui (CRYPTO: SUI), and Avalanche (CRYPTO: AVAX), have declined significantly. All of them still boast market caps of $9 billion or higher and still rank among the top 15 cryptocurrencies in the world. However, it has become obvious that many investors won't touch them.

The worst performer by a wide margin has been Ethereum. While Solana and Cardano are down a disappointing 20% on the year, Ethereum is down an eye-popping 46%. The investor sentiment around Ethereum is deeply negative, and the gap between Ethereum and its closest rivals appears to be narrowing.

Quite frankly, this shouldn't be happening. After all, Ethereum is the world's second-largest cryptocurrency, with a market value of almost $220 billion. It is one of only two cryptos (Bitcoin being the other) with a spot exchange-traded fund (ETF). During the past decade, it has had an impeccable track record of delivering outsized returns to investors.

Despite its current slide, Ethereum still appears to have the support of the Trump administration, which made it a cornerstone of its new U.S. Digital Asset Stockpile back in March. Members of the Trump family, including President Trump himself, have publicly vouched for Ethereum on social media. And World Liberty Financial, the crypto company affiliated with the Trump family, has made Ethereum a high-profile holding.

Meme coins

If there's any category of crypto that's performing worse than Layer 1 blockchains right now, it's meme coins. The current tariff environment has led to a stark risk-off mentality among investors, and there hasn't been a good reason to invest in meme coins for months now.

Image source: Getty Images.

Dogecoin (CRYPTO: DOGE), the top meme coin by market cap, is down 45% this year. Shiba Inu (CRYPTO: SHIB), the second-largest meme coin, is down 37%. Pepe (CRYPTO: PEPE), the third-largest meme coin, is down 53%. And the Official Trump meme coin (which trades under the ticker TRUMP), the fourth-largest meme coin, is down a face-melting 84% since its debut back in January.

The message from investors could not be clearer: Stay away from meme coins. Even before tariffs, meme coins were risky, speculative investments. Now, they are complete dumpster fires, with Cathie Wood of Ark Invest recently suggesting that nearly all of them will soon be worthless.

That's not to say that some meme coins won't pop every now and then, but that's likely to be a dead cat bounce. (Or in the case of Dogecoin and Shiba Inu, a dead dog bounce.) Sorry, pet lovers, but I can't think of a worse place to invest your money right now. If you're buying animal-themed meme coins now, you're providing the exit liquidity for investors sitting on big losses right now.

Are any of these beaten-down cryptos worth buying now?

It might be tempting to sift through the crypto discount bin to see whether there are any bargains to be found. After all, we're talking about multibillion-dollar digital assets that have seen their value slashed anywhere from 20% to 50% in a matter of months. Surely, there's a good deal somewhere?

With that in mind, one crypto that might be worth exploring right now is Solana. Even amid tariff uncertainty, activity appears to be picking up on the Solana blockchain. And Solana has clearly emerged as the top challenger to Ethereum, which appears to be mired in an existential crisis these days. Best of all, we've seen how much Solana can pop. Back in 2023, Solana soared by more than 900%.

Just keep this in mind: Concerns about recession, inflation, and a potential trade war mean there is absolutely no appetite right now for many cryptocurrency investments. For now, Bitcoin remains the top crypto to target amid tariff uncertainty. Historically, Bitcoin has been more resilient than other cryptos in the face of economic and geopolitical uncertainty, and it could be your best option as a potential hedge against a global economic slowdown.

Should you invest $1,000 in Ethereum right now?

Before you buy stock in Ethereum, 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 Ethereum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Dominic Basulto has positions in Bitcoin, Cardano, Ethereum, Solana, Sui, and XRP. The Motley Fool has positions in and recommends Avalanche, Bitcoin, Cardano, Ethereum, Solana, Sui, and XRP. The Motley Fool has a disclosure policy.

The U.S. Federal Reserve is facing heavy pressure to cut interest rates. President Donald Trump recently warned that Fed Chairman Jerome Powell's job could be at risk if he doesn't cut rates fast.

But let's set aside all the political undertones and deal-making calculations, and focus on the overarching questions: What happens to cryptocurrency prices if there is a rate cut? And which cryptocurrencies would become most attractive in a lower-rate environment?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

The relationship between interest rates and crypto prices

The general rule of thumb is that rising interest rates result in lower crypto prices, while declining interest rates result in higher crypto prices. That might sound simplistic, but when rates are lower, the cost of borrowing is lower. Moreover, risky assets suddenly appear more attractive on a relative basis. That generally leads to an infusion of new money pouring into crypto.

This is the scenario that Charles Hoskinson, the co-founder of both Ethereum (CRYPTO: ETH) and Cardano (CRYPTO: ADA), now sees happening with the crypto market. In a recent podcast interview with CNBC, he laid out a scenario where lower interest rates might lead to a new speculative frenzy in crypto, helping to push Bitcoin (CRYPTO: BTC) to $250,000 by the end of the year. That's incredibly bullish but gives you an idea of the immediate impact a rate cut could have on crypto.

Historical evidence

Given that Bitcoin officially started trading in January 2009, three distinct time periods over the past 15 years could provide important clues about the link between crypto prices and interest rates.

There was the low interest-rate environment created in response to the 2008 global financial crisis; the Federal Reserve's policy of interest rate increases in 2017–2018; and the low interest-rate environment created in response to the pandemic.

If you look at these three periods, they all tell the same story: Lower interest rates help crypto, while higher interest rates hurt it.

The Federal Reserve Building in Washington. Image source: Getty Images.

For example, during the COVID-19 pandemic, central banks around the world slashed interest rates nearly to zero and introduced all sorts of new stimulus measures, in the hopes of reviving economic growth.

And it worked! The period from 2020-2021 resulted in a huge bull market rally for Bitcoin, as it skyrocketed in value to a (then) all-time high of $69,000 in November 2021.

It's easy to see why President Trump is now pressing so hard for interest rate cuts. If new tariffs are going to curtail future economic growth, then there needs to be some sort of stimulus to keep the economy moving. And that stimulus is cheap money.

Just keep in mind: Crypto is still a relatively new asset class, and we still really don't know how it will perform after rate cuts. History may be a guide, but it's not a precise indicator of what happens next.

Which cryptos should you buy?

Based on the above, Bitcoin appears to be the obvious beneficiary of lower interest rates. After all, didn't it skyrocket to $69,000 as soon as rates were cut in 2020?

However, don't forget about altcoins. In an environment of lower interest rates, riskier assets such as beaten-down altcoins (some of them down as much as 50% for the year) could start to look a lot more attractive on a relative basis. And that might mean we finally get the arrival of "Altcoin Season" -- the time of the year when risky altcoins explode in value and outperform Bitcoin.

All of this should highlight the importance of portfolio diversification. It still makes sense to make Bitcoin the focus of any new crypto buying in the wake of rate cuts, but now might be the time to explore new coins to diversify your portfolio.

My personal pick right now would be coins with significant exposure to the decentralized finance (DeFi) sector. That's what World Liberty Financial, the crypto company affiliated with the Trump family, appears to be loading up on now. These coins also performed very well during the 2020-2021 crypto bull market cycle, highlighted by the speculative, frothy "DeFi Summer" of 2020.

As always, remember to do your due diligence. Crypto has always been risky and volatile, and the current economy is especially dicey, with unknown consequences ahead.

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 made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

Now, it’s worth noting Stock Advisor’s total average return is 829% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Dominic Basulto has positions in Bitcoin, Cardano, and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Cardano, and Ethereum. The Motley Fool has a disclosure policy.

If you're new to crypto, here's one idea you might not have heard before: Bitcoin (CRYPTO: BTC) could be ready to challenge the U.S. dollar as the world's reserve currency. That type of transformative change, of course, would be history-making, and it would require a fundamental restructuring of the global financial system -- sort of like we're seeing right now, with tariffs and the potential for a global trade war.

In his annual letter to investors this year, BlackRock (NYSE: BLK) CEO and Chairman, Larry Fink, suggested that Bitcoin had the potential to replace the U.S. dollar as the world's reserve currency. Is that scenario really possible? And if it is, what does it mean for Bitcoin's future?

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

The case for Bitcoin as a reserve currency

There's obviously a lot to unpack here. The first is the entire notion of what a reserve currency should be, and what role it plays in the global economy. The easiest way to think about a reserve currency is that it is the one currency that you need to do business in the world. So it needs to be truly global. It needs to function as a medium of exchange for trade and investment. And it needs to be accepted and used by citizens in every sovereign nation.

According to crypto enthusiasts, Bitcoin meets -- at least on paper -- the required characteristics to be the world's reserve currency. In fact, for more than a decade, Bitcoin bulls have made the argument that Bitcoin would eventually replace the U.S. dollar. They view Bitcoin as "sound money," while fiat currencies are fundamentally flawed, due to the ability of governments to print vast sums of money.

At some point in time, the thinking goes, people will prefer to hold Bitcoin rather than dollars. Sovereign governments and central banks will choose to stockpile Bitcoin rather than dollars. Assets will begin to be priced in Bitcoin, rather than in dollars, to facilitate global trade. Eventually, the dollar will become just like the pound, which served as the world's reserve currency for more than a century.

Larry Fink's letter to investors

That's all you need to understand the context of Fink's annual letter to investors. As Fink points out in his 2025 letter: "The U.S. has benefited from the dollar serving as the world's reserve currency for decades. But that's not guaranteed to last forever." He points specifically to the nation's growing debt load, which has grown at 3 times the pace of gross domestic product (GDP) since 1989. In 2025, says Fink, interest payments on that debt will reach nearly $1 trillion, which is more than the U.S. spends on defense.

At some point, it's just not sustainable. The expanding U.S. debt load is a potential house of cards, the unfortunate outcome of America living beyond its means for decades. This is a point that Fink drives home: "If the U.S. doesn't get its debt under control, if deficits keep ballooning, America risks losing that position to digital assets like Bitcoin."

Image source: Getty Images.

In many ways, what is happening now in America is similar to what happened to Great Britain in the last century. Paying for two world wars at the start of the 20th century nearly bankrupted Great Britain, eventually forcing it to cede its place in the global economy to the United States.

How likely is this scenario?

It's hard to imagine a world where Bitcoin takes over immediately. As in the case of the dollar replacing the pound, it will take massive international cooperation. In 1944, it took the Bretton Woods Agreement to make it happen, when dozens of nations from around the world met in New Hampshire to hammer out a deal. In addition to holding gold, the nations agreed to hold dollars, which were backed by the world's largest gold supply at the time. And they agreed on the role of central banks in setting exchange rates pegged to the dollar.

A similar type of massive global cooperation involving Bitcoin might strike some people as being preposterous. But just look at what is happening now with tariffs and a potential trade war with China. Any time the White House says something like "50 nations called us to discuss a deal," I think about a new Bretton Woods.

Bitcoin and the global financial system

The current debate over tariffs and trade is exposing all the interdependencies between fiscal deficits, trade deficits, and global economic growth. We're learning about the fragility of the equity and debt markets, and how investor perceptions can change on a dime. The past few weeks have been a crash course in macroeconomics for many investors.

Against this backdrop, sovereign governments and central banks are starting to stockpile Bitcoin, with the U.S. leading the way with its Strategic Bitcoin Reserve. Russia and China are already experimenting with Bitcoin as a mechanism for international trade, especially in settling energy trades. Bolivia has said it will pay for imported electricity with cryptocurrency, and El Salvador has experimented with Bitcoin-denominated sovereign debt.

These are potential baby steps to Bitcoin eventually replacing the U.S. dollar one day. But it will likely require something massive and consequential, like the 1944 Bretton Woods Agreement, to make it happen. You can't just say that Bitcoin is a reserve currency and expect it to happen overnight. However, a potential change in the global financial system might be the best reason yet to start buying Bitcoin now.

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 made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.