If you're anything like me, the following thought has crossed your mind at least once:

"Should I convert all of my crypto into Bitcoin?"

In this article, I'd like to present 2 reasons why this might be a GOOD IDEA, and 2 reasons why this might be a BAD IDEA. Ultimately, the decision is up to you!

GOOD IDEA #1: Bitcoin is king

As of writing, Bitcoin is by far the most valuable cryptocurrency currently available on the market, with a price of $37,241 USD. Its nearest competitor, Ethereum, currently has a comparatively distant price of $2,094 USD. This means that owning 1 Bitcoin is equivalent to owning roughly 17.8 ETH - a significant lead in monetary terms.

Bitcoin is also way more well known than any other cryptocurrency - an important factor to attracting new people into its ecosystem. While your aunt or uncle may not know anything about Ethereum or Ripple, you can rest assured that they've heard of Bitcoin. It is and will most likely remain the first entry point people have into crypto, and with the recent ETF movement - this has never been easier for the common person.

GOOD IDEA #2: No other crypto has the scarcity AND value that Bitcoin has 

There is a widely held belief that there will only ever be 21 million Bitcoin ever available. However, a deeper dive into these numbers reveals that realistically, that number is much lower. After accounting for lost Bitcoin, estimates place the total potential supply at anywhere between 15 million to 18 million (depending on who you believe).

This scarcity gives Bitcoin value in a way that no other cryptocurrency can compete with. Other cryptocurrencies have tried to copy the Bitcoin model, but all have failed. This combination of high value and scarcity is a hallmark of the Bitcoin ecosystem, and a great reason to believe it will always be the number 1 crypto by price worldwide.

BAD IDEA #1: You lack diversification

No, I'm not talking about Hugh Hefner's girlfriends. While the idea of holding Bitcoin exclusively has an appeal, it does mean that you could be missing out on some pretty big gains had you held some other coins as well. In the last bull run, it seemed like you could pick any coin and come out ahead, but the crypto winter chilled many coins (if not all) and there are no guarantees they will return to their former all time highs.

However, holding a collection of 'solid' cryptocurrencies in your portfolio can be helpful in taking advantage of multiple potential gains. For example, had you bought the following collection of coins 1 year ago, this would be what your portfolio would look like.

Bitcoin - $100 (up 114.38%) to $214.38

XRP - $100 (up 73.87%) to $173.87

Solana - $100 (up 217.98%) to $317.98

Total profit = $406.23

Meanwhile, had you invested that $300 solely in Bitcoin, it would have looked like this:

Bitcoin - $300 (up 114.28%) to $643.14

Total profit = $343.14

Of course, this approach also relies on you picking the right coins - but clearly there are alternatives to earn profits beyond simply owning just Bitcoin.

BAD IDEA #2: There are no guarantees Bitcoin will always be king

Despite all of the reasons which make Bitcoin the current King of Crypto, history has taught us that 'sure things' do not always end up being 'sure things' forever. Think Blockbuster, Toys R Us, or Borders just to name a few. It is impossible to predict the future, thus making it impossible for anyone to say with certainty that Bitcoin will always be number 1.

Black swan events, such as the COVID-19 pandemic spun the world on its head. In the future, natural disasters, technological advances, or wars can also all wreak havoc on the way society functions. Despite the perceived security of the Bitcoin network, an attack or hack which compromises the network could do incredible damage as well - meaning that those who hold only Bitcoin could potentially have a lifetime of savings wiped out. This outcome is microscopically small (which shows just how strong the Bitcoin network is), but something important to consider.

Although it seems absurd now, another cryptocurrency 'flipping' Bitcoin and taking the lead could also occur. Some analysts have predicted that this could be accomplished by Ethereum, but only time will tell.

Conclusion

As I said, only you can decide the strategy that is best for you. For me, I enjoy having roughly 70% Bitcoin, 25% Ethereum, and 5% Other - but that's just me! I may also change that in the future, there are no guarantees in crypto.

What do you think? Feel free to leave your personal portfolio allocation in the chat!