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Bitcoin 's (CRYPTO: BTC) earliest investors, particularly those who have been able to hold on through the wild volatility, are probably rich beyond their wildest dreams. The monster gains have continued in recent times, with this top digital asset rising 594% just in the last five years, a much better gain than the Nasdaq Composite index .

Bitcoin is trading just 10% off its peak price, and I still believe it's the ultimate cryptocurrency to buy with $1,000. Here are three reasons why.

Fixed supply cap

Perhaps Bitcoin's defining characteristic is its fixed supply cap: There always will be only 21 million coins in circulation. This limit is etched into the Bitcoin source code, and unless the majority of nodes approve a change, it will stay this way. For what it's worth, I don't see the hard cap ever being altered because if it did change, it would undermine the value of the entire network.

Bitcoin's fixed supply is precisely what makes it stand out, versus fiat (government-backed) currencies , such as the U.S. dollar. The Federal Reserve, our central bank, has immense power when it comes to controlling the money supply. Historically, the number of dollars in circulation has gone up astronomically.

This setup is what makes Bitcoin superior to the current monetary network. A constantly debasing currency is troubling enough and a situation in which your dollars lose value over time. But in the U.S., the world's most powerful economy, the debt problem is becoming too hard to ignore. As of this writing, the country has $35 trillion in outstanding debt, a figure that will only expand due to ongoing fiscal deficits.

It's anyone's guess if Bitcoin will one day become the new global-reserve currency. However, you can see why a decentralized and digital monetary network with absolute scarcity has tremendous value. And this warrants making a small investment.

Powerful catalysts

What's remarkable is that Bitcoin went from an obscure internet money for tech geeks to a legitimate mainstream financial asset. This has never been more obvious than when the U.S. Securities and Exchange Commission approved Bitcoin spot exchange-traded funds (ETFs) in January 2024.

The launch of these spot ETFs can also be viewed as a stamp of approval, one that shows that Bitcoin has arrived and should be taken seriously by leaders on Wall Street and in Washington.

Bitcoin is also becoming a popular political campaigning tool. For example, during the Bitcoin 2024 Conference, which is happening right now in Nashville, former President (and 2024 candidate) Donald Trump is the keynote speaker. It's difficult to envision a winning president who doesn't embrace Bitcoin, given that it may be able to attract voters.

Another recent catalyst was the April halving , which reduced Bitcoin's new supply rate by half. This event happens about every four years and is exactly what enforces the crypto's fixed supply cap of 21 million coins. Historically, its price has soared in the year-and-a-half after a halving has occurred.

Return potential

Businesses that sell products and services to customers generate revenue and profits. Bitcoin, of course, isn't set up in the same way. That makes it hard to figure out what its value should be.

Bitcoin is often viewed as a digital version of gold. But I've argued before how this cryptocurrency is superior to the precious metal . Gold has a market value of $16 trillion, which is 12 times higher than Bitcoin's $1.3 trillion. Over time, I don't think it's out of the question that the digital asset will match or even eclipse gold.

Therefore, even though Bitcoin has skyrocketed since its launch, it could still produce fantastic returns for investors who can buy and hold for the next 10 or 20 years. This makes it the ultimate cryptocurrency to buy with $1,000.

Before you buy stock in Bitcoin, consider this: