Bitcoin and the rest of the cryptocurrency industry have been on a significant rally since the summer. Both Bitcoin and Ether, the two most valuable cryptocurrencies, have gained 117% and 160%, respectively, since they bottomed in July. Plus, overnight, both the major currencies once again set new all-time highs.
There are a variety of reasons for the optimism lately. New ETFs in the United States give hope that cryptocurrencies are being more widely accepted on Wall Street.
Furthermore, one of the first reasons Bitcoin became popular continues to play a role in its popularity, as it’s important to hedge against inflation, and many think it could replace gold as a digital store of value.
How high could Bitcoin rally this year?
There have been a number of analysts that have come out with significant price target for Bitcoin. Back in August, Adrian Zduńczyk a technical analyst, estimated Bitcoin could get as high as US$120,000 in the fourth quarter. He also warned of a potential pullback that could follow of significant proportions.
However, he did note that the further out you try to make technical projections, the less accurate they generally are.
Since this call in August, Bitcoin prices trended sideways for a couple of months before breaking out last month. And while this is what he predicted, part of the breakout was due to the launch of Bitcoin ETFs south of the border, which have brought a tonne of optimism back to the sector.
Furthermore, he also predicted Bitcoin would trade between $40,000 and $50,000 for some time, before breaking that resistance point. Now, all that’s left is the resistance around $65,000, Bitcoin’s previous all-time high, right where we are at today.
Back in August, Zduńczyk said once we break that final resistance point, the cryptocurrency could then rally straight to his predicted high between $90,000 and $120,000 by year-end. Of course, crossing the $100,000 market will be another resistance point due to the psychological factor of adding another zero to the amount.
It’s worth noting that so far, Zduńczyk hasn’t been completely correct with his estimates. However, he’s been pretty spot on. In addition, other analysts have also joined in the bullish price predictions.
Graham Jenkin, the CEO of CoinList, a platform to buy and sell cryptocurrencies, more recently said that he and many of the employees at CoinList all expect Bitcoin to hit $100,000 by year-end or at least to come close to the mark.
So, with all this optimism from investors and analysts, if you’re looking to gain exposure to Bitcoin, here are two top stocks to consider.
Two top Canadian stocks for exposure to the most popular cryptocurrency
There are two main options investors have to gain exposure to cryptocurrencies. The first option is, you can buy an ETF that gives you indirect exposure. For each unit of the fund, you get a certain amount of Bitcoin that is owned and stored for you.
One of the most popular Bitcoin ETFs for Canadian investors is the CI Galaxy Bitcoin ETF. Not only can you buy it for your TFSA and save on the tax, but the transaction costs of buying an ETF are far cheaper than buying the actual Bitcoin. Plus, the fund stores it for you, which is another valuable service investors get. And on top of everything, the fund charges a management fee of just 0.4%. Buying an ETF is certainly an attractive option for many investors.
The other strategy you could consider is buying a crypto mining stock like Bitfarms. These stocks have more growth potential than the ETF. However, they’re also considerably more volatile. So, if prices are falling, these stocks could severely underperform.
Bitcoin miners are an excellent choice for investors with a longer time horizon and more risk tolerance. While all investments in crypto should be for the long term, younger investors willing to take on the risk should be able to manage the volatility of a Bitcoin miner.
So, if you’re looking for a high-growth investment and lack exposure to cryptocurrencies, I’d act soon. They continue to rally and get more expensive.