If you were going to tell me that Bitcoin (CRYPTO: BTC) would sail to the all-time highs it hit back in 2022, I would have laughed in your face.
And yet here we are. After 2021, many believed the heights reached for Bitcoin would never happen again — that the investments came from investors who had cash on hand during the pandemic — and there would be no way that the investment would surge around a recession.
And yet, here we are, with the price of Bitcoin now at US$72,595 as of writing. Why?
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What happened?
The price of Bitcoin surged past its recent high set back in late 2021 to hover around US$72,000 so far this week. The growth alone is impressive, with the increase climbing around 70% so far this year alone!
The climb comes not from investors buying Bitcoin directly but certainly from a move across the border. The United States approved cryptocurrency exchange-traded funds (ETF), leading to a bulk of them coming on the market. And that bulk has led to an increase in purchasing spot Bitcoin ETFs.
What’s more, investors may notice that this climb in Bitcoin price comes just as we see a drop in U.S. and Canadian dollars. Some investors are using Bitcoin to hedge against inflation. There is a finite supply of Bitcoin, just as with gold, and that contrasts with traditional currencies.
What could happen next?
Analysts and economists are divided on what could happen next for Bitcoin. In fact, there is a significant event coming up that many investors should pay attention to, and that’s the “halving event.”
It’s expected there will be a Bitcoin halving in spring 2024. This event would cut the reward for miners in half as well, potentially impacting the supply and driving the price up due to scarcity. Some analysts believe this could fuel the current upswing.
Other events to watch are regulations. There continue to be security concerns about Bitcoin and cryptocurrency in general. Some analysts believe that clearer regulations could bring more institutional investors on board, again boosting value. But the reverse could also be true.
There also continues to be volatility in this market, and that could become worse in a bull market. The recent price surge comes as experts are optimistic about a true bull market for Bitcoin. However, others are cautious, speaking to what happened back in 2021.
Should you invest?
If you want to invest in Bitcoin and get in on the recent upswing, there are a few safe ways to do so. First off, I would invest in Bitcoin ETFs as discussed. These are liquid and allow you to invest in a basket of assets that track the price of Bitcoin. A great option right now is Purpose Bitcoin CAD ETF Currency Hedged Units (TSX: BTCC). The ETF directly invests in Bitcoin but is as liquid as a stock.
What’s more, I would also consider creating a stop loss. This can be done even in a Tax-Free Savings Account. Simply calculate the amount you’re willing to let the price drop before selling the ETF. For instance, if shares are at $14 and drop by 10%, that would be $12.60. So, you would create a stop loss at $12.60, which would automatically sell your shares before they fall even further.
If shares climb higher, you can simply change the stop loss! After all, you want to bring in as much as you can in gains. You can also create a stop limit to sell the price once it hits a target and you’ve decided enough is enough.
Bottom line
Bitcoin remains risky, but there are ways to get in while still protecting yourself. But make sure to continue being up to date on its meteoric rise, so you don’t go through a meteoric crash.
