The Motley Fool

Bitcoin Reclaims US$1 Trillion Market Cap: Should You Buy, Sell, or Hold?

Image source: Getty Images

The last 12 months have revolutionized the cryptocurrency space, as it has attracted massive investments from institutional investors. Publicly listed companies, including Tesla and Square, have held Bitcoin on their balance sheets, driving the price of the digital currency significantly higher.

This meant the price of Bitcoin has surged over 1,000% since in the last year, reaching a valuation of $1.03 trillion. It now indicates the most popular cryptocurrency has a valuation that’s higher than Tesla and Facebook.

Canada’s Bitcoin ETF

Due to the rising popularity of Bitcoin and peer digital currencies, Canada launched the first crypto ETF for investors called The Purpose Bitcoin ETF (TSX:BTCC.B), making it really easy to gain exposure to the flagship cryptocurrency.

Investing in the crypto space allows you to diversify your portfolio. Further, investing in the ETF means you can now hold Bitcoin in registered accounts such as the TFSA and benefit from tax-free gains.

The Purpose Bitcoin ETF aims to democratize Bitcoin access to retail and institutional investors. It purchases physical Bitcoin, and the investor can then own the fund that owns the digital asset. The total assets under management stand at $885 million, and the number of Bitcoins owned by the ETF stands at 12,467.6446.

Investors don’t have to worry about liquidity while investing in this ETF, as the trading volume is high. It also eliminates the risk of hacking and potential loss of electronic or hardware keys by crypto investors.

The blockchain vertical continues to innovate

Given the potential for massive disruption in the blockchain and cryptocurrency space, several companies are introducing products in this vertical.

Recently Bluzelle partnered with Equinix to allow crypto participants to launch validators in the cloud. Currently, running a validator on blockchain comes with its own set of challenges. For example, if you stake 200 DOT on the network with your own device, you can earn rewards as a nominator. However, the validator then takes a lion’s share of these rewards.

With a cloud service like Amazon Web Services or Google, you can run a validator easily on your device and collect much higher rewards than if you are simply a nominator on the network.

Until now, the main issue has been security. It’s not been possible to run a validator securely on any cloud network. Here, Bluzelle aims to leverage the Equinix SmartKey to enable secure cloud-hosted PoS validators. This partnership will allow people to set up a secure and high-performance validator on cloud platforms.

The Foolish takeaway

While the crypto space continues to attract retail and institutional investment, you should understand that it remains a highly volatile asset class. Bitcoin and other digital currencies are part of an unregulated market and have lost 90% in market value several times in just a few months.

There is a significant speculative element associated with Bitcoin and it is subject to wild price swings. Investors need to allocate only how much they can afford to lose for buying Bitcoin.

Are you a fan of growth assets like Bitcoin?

Should you invest $1,000 in Hive Blockchain right now?

Before you consider Hive Blockchain, you may want to hear this.

Motley Fool Canadian Chief Investment Advisor, Iain Butler, and his Stock Advisor Canada team just revealed what they believe are the 10 best stocks for investors to buy right now... and Hive Blockchain wasn't one of them.

The online investing service they've run since 2013, Motley Fool Stock Advisor Canada, has beaten the stock market by over 3X. And right now, they think there are 10 stocks that are better buys.

Learn More Today!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, and Tesla. Tom Gardner owns shares of Alphabet (A shares), Alphabet (C shares), Facebook, Square, and Tesla. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Equinix, Facebook, Square, and Tesla and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.