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Forget Bitcoin halving! I’d use the stock market crash to buy bargain FTSE 100 stocks

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A stock market crash is the ideal time to buy bargain FTSE 100 stocks. So don’t be distracted by lesser opportunities, such as the hype over crypto currency Bitcoin halving over the next few days. In the longer run, I believe that buying top UK companies free of tax inside your Stocks and Shares ISA allowance is a far more reliable way to get rich than trading cryptocurrencies.

April’s FTSE 100 recovery has already demonstrated the benefit of buying at the bottom of the market. The index is now up more than 900 points since dipping below 5,000 on 23 March, a rise of just over 18%. Those who bought at the bottom of that dip did well.

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The index is still 20% lower than it was in January, so there are still bargain FTSE 100 stocks to be had. You should never waste a stock market crash like this one, if you have money to spare.

Some will also be looking at Bitcoin, and there is nothing wrong with adding a little diversification to your portfolio. I would tread carefully, though, as the price rises towards $10,000. Volatility is strong with this one.

I’d rather buy bargain FTSE 100 stocks

The reward for mining the crypto was originally set at 50 Bitcoins, but that is cut in half every 210,000 blocks, or about every four years. That halved to 25 in 2012, then 12.5 in 2016 and 6.25 in the next few days. 

That could hit supply growth and drive up the price. The previous two Bitcoin halvings kicked off huge rallies of 10,000% and 2,500% respectively. I wouldn’t bet on that happening again, though. As analysts at GAIN Capital have pointed out, today’s market cap is 15 times higher than at the last halving. Also, the resurgence may have been priced in.

I hold a tiny amount of Bitcoin, but I bought that at a much lower price. I wouldn’t rush to buy more at a price of almost $10,000, and would target bargain FTSE 100 shares instead.

Beware the Bitcoin halving

I prefer to invest in the stocks of companies that have proved their merit in the real world, rather than struggling to find purpose in the virtual one. I like companies with loyal customers, strong balance sheets, reliable revenues, a competitive edge over their rivals, and healthy growth prospects.

The coronavirus has cast a shadow over many top UK companies. That is why you can find so many bargain FTSE 100 shares at the moment. The index reflects what is happening in the real world. Bitcoin doesn’t.

Cheap shares are hard to resist

The Covid-19 crisis will drag on a bit longer. I’m hoping that when it passes, the world will rush out, desperate to make up for lost time. There will be bumps along the way, but eventually, the economy and stock markets will rise.

If you buy bargain FTSE 100 stocks today and hold them for the long term, you should reap the benefit when that happens. What happens to Bitcoin is anybody’s guess.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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