Bitcoin, the world’s largest digital currency, soared above the US$69,000 mark this week. It has since retreated below the US$65,000 mark. Today, I want to discuss whether the top cryptocurrency could rise above the US$100,000 level over the next year. This time last year, Bitcoin was still trading below US$20,000. Does the crypto boom have the legs to carry Bitcoin over the line? The fledgling sector will have to battle bearish sentiment and rising interest rates in the months ahead. Let’s discuss whether it can overcome these obstacles.
Why Bitcoin has reached an all-time high this fall
In late October, I’d discussed whether investors should buy the dip in Bitcoin. At the time, I’d suggested that the significant degree of liquidity had the potential to push cryptos higher in the near term. Moreover, Bitcoin has been powered by further entrenchment in the investment mainstream.
Last month saw the launch of the first United States futures Bitcoin-linked exchange-traded fund (ETF). That sparked even more interest in Bitcoin and the broader crypto market this fall. ProShares Bitcoin Strategy ETF has been largely static since its debut. This is somewhat revealing and may give investors some pause after Bitcoin retreated so quickly from its recent record high.
Can the crypto market keep up this momentum?
Crypto miners like Hut 8 Mining have also thrived in this environment. Shares of this crypto stock have climbed 359% in 2021 as of close on November 11. However, the stock has slipped 3.5% week over week. I’d suggested that investors should scoop up stocks like Hut 8 to start this month.
The crypto bull market has been exciting, but investors should be very cautious right now. Digital currencies have benefited from the same conditions that have led to big gains in the broader stock market. However, central banks are now telegraphing their intention to drawn down on loose monetary policy.
High inflation numbers have increased the urgency at central banks to normalize interest rates. The United States saw inflation jump to a 31-year high of 6.2% in October. Reportedly, this may trigger the Federal Reserve to move forward on two interest rate hikes in 2022. Meanwhile, the Bank of Canada (BoC) also has its sights set on interest rate hikes with inflation in Canada rising to an 18-year high. This tightening cycle could lead to volatility, as investors have gorged on loose policy since the start of the pandemic.
Should you look to buy Bitcoin today?
Investors who are still eager for exposure to Bitcoin should consider Purpose Bitcoin ETF (TSX:BTCC.B). This Canadian ETF launched in February. Its shares have climbed 17% month over month at the time of this writing.
The ETF offers Canadians the opportunity to own Bitcoin in a registered account. Bitcoin’s bull run looks even better when investors can feast on those capital gains in a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP).