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Heading into the final quarter of 2026, crypto investors have some tough choices to make as they diversify their portfolios.
Should they double down on Hyperliquid (HYPE -3.65%), which is up a stunning 236% this year and now has the support of the Trump administration? Or should they look for another high-flying altcoin that might benefit from the passage of the Digital Asset Market Clarity Act?
Or there's a third option: They could go with a proven winner that's having a bit of an off-year in 2026, down 9%. I'm talking, of course, about Bitcoin (BTC -1.95%), which is now coming off one of its best Augusts ever and could be primed for a final year-end rally.
Upside potential and downside protection
What makes Bitcoin stand out from every other cryptocurrency is its unique mix of upside potential and downside protection. As BlackRock recently noted, Bitcoin has a unique duality: It is both a "risk-on" and a "risk-off" asset.
In terms of upside potential, all you have to do is look at the numbers over the past decade. Bitcoin has delivered truly exponential gains over that time period. On Sept. 1, 2016, Bitcoin was trading at just $572. Today, it trades at just under $80,000.
Bitcoin has consistently delivered triple-digit returns over a sustained period. In fact, the outlier years are the ones when Bitcoin does not double in value. Case in point: In six of the past 10 years, Bitcoin has delivered returns of 92% or higher. No wonder Bitcoin's price growth has been off the charts.
In terms of downside protection, Bitcoin can serve as a unique portfolio diversifier. As BlackRock points out, Bitcoin has historically been uncorrelated with major asset classes. That has made it a phenomenal hedge, because Bitcoin can zig when other assets zag.
In addition, Bitcoin has proven its worth as a safe-haven asset during periods of extreme geopolitical and macroeconomic instability. For good reason, many investors think about Bitcoin as "digital gold." As former Fed Chair Jerome Powell has noted, Bitcoin could be a modern form of gold that can (theoretically) preserve its value over time.
How high can Bitcoin go?
Right now, Bitcoin is trading at just under $80,000. But plenty of investors think it could reach $100,000 this year. And, from there, the sky is the limit. Investment firm Bernstein, for example, thinks Bitcoin will hit $150,000 by mid-2027 and $300,000 by 2029.
Others have far loftier targets. For example, Cathie Wood of Ark Invest is convinced that Bitcoin could be trading above $1 million by the end of 2030.
With that in mind, Bitcoin is the one cryptocurrency that's at the top of my investment shopping list right now. It has a unique mix of upside potential and downside protection that can help it outperform in nearly any type of market environment.
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