The onset of COVID-19 and its impact on the job market and overall economy highlighted the importance of creating additional revenue streams through investing your savings to earn more money. Investing in technology is proving itself to be a viable method to grow your wealth without adding too much capital risk to your portfolio. However, another asset class has become increasingly popular in recent years: cryptocurrencies.
Cryptocurrency investing has made many millionaires among investors who managed to buy cryptocurrencies at the right time. The advent of Purpose Bitcoin ETF (TSX:BTCC.B) led to Canadian investors getting an easier opportunity to gain exposure to the world’s most popular cryptocurrency.
If you are bullish on the growth of cryptocurrencies, investing in Purpose Bitcoin ETF could be a viable way for you to gain exposure to the digital asset while retaining a degree of liquidity that you might not otherwise enjoy while investing directly in Bitcoin.
Today, I will discuss the high-growth ETF that thinks outside the box to help you make a more well-informed decision about whether it could be a worthwhile investment for you.
Another dip in Bitcoin prices
At writing, Bitcoin is trading for US$47,990.70, down by over 9% from September 6. The sudden decline in Bitcoin prices after it managed to rise above the US$52,690 mark for the first time since May 2021 could have happened due to several possible reasons.
El Salvador, a small nation in Latin America, adopted Bitcoin as a legal tender on September 8, 2021. This became the first instance for a cryptocurrency to finally gain the status equivalent to traditional currency in any country. It means that people in El Salvador could spend Bitcoin for day-to-day transactions as they could with their national currency.
Despite the fact that this is something Bitcoin believers were longing for, the cryptocurrency adoption did not go as planned.
El Salvador faced several issues adopting the decentralized digital currency. The digital wallet did not operate as well as it was needed to, and the government felt compelled to unplug the digital wallet entirely to counteract the massive surge in demand.
An economy as small as El Salvador might not seem to be significant enough to be the reason for such a massive decline in Bitcoin valuation. However, if you consider the case for El Salvador as beta testing for global adoption for cryptocurrencies, the failed adoption could have contributed to the decline atop of technical factors.
Investing in a Bitcoin ETF
The decline in Bitcoin prices may as well be a temporary dip that could present you with significant upside, provided that Bitcoin prices rise again to their previous all-time highs. Of course, purchasing Bitcoin directly is not a simple enough process due to the unregulated nature of the industry. You cannot buy or sell the cryptocurrency at a moment’s notice to capitalize on its rising value when it begins to climb again.
That is where buying a Bitcoin ETF like BTCC could come in handy. Instead of going through the hassle of purchasing cryptocurrencies through a crypto exchange, you can simply purchase the ETF to gain exposure to the equivalent dollar amount of Bitcoin through BTCC.B and enjoy the flexibility that comes with trading traditional securities on the stock market.
Purpose Bitcoin ETF uses its investors’ funds to buy and hold Bitcoin on their behalf in cold storage. The ETF’s performance reflects the growth or decline of the underlying asset it holds, allowing investors to gain exposure to the digital asset without buying it themselves. Minus the 1% management fees, you can enjoy similar returns that you could get from holding that amount of Bitcoin in a digital wallet.
Whether or not to recommend Purpose Bitcoin ETF is tricky. If you are an investor bullish on the cryptocurrency’s recovery and you have significant exposure to safer asset classes in your portfolio, it could be worth taking the risk by allocating a small portion of it to Purpose Bitcoin ETF.