Why Everyone Is Talking About Bitcoin Again

Bitcoin (CRYPTO:BTC) continues to surge in price but has been a bit shaky in the last month. So, what should investors do now?

| More on:
A depiction of the cryptocurrency Bitcoin

Image source: Getty Images.

Bitcoin (CRYPTO:BTC) prices are rising again, with the price of the cryptocurrency surging just year to date. The price of Bitcoin is already up 128% in the last year, and about 53% year to date as of writing. However, the price of Bitcoin has come down from 52-week highs; it is currently down 10% since those highs.

So, what’s been fuelling this rally in the cryptocurrency? And what should investors consider before jumping in? Here’s why everyone is talking about Bitcoin again.

What happened?

First, there was the approval of spot Bitcoin exchange-traded funds (ETFs). While cryptocurrency ETFs were already approved in Canada, the approval in the United States was a huge move. These ETFs directly hold Bitcoin and allow institutional investors to participate. This area has been previously hesitant due to regulatory concerns or lack of infrastructure in the past.

The influx of institutional money into Bitcoin increased the demand for the cryptocurrency and drove up the price in the process. Furthermore, ETFs provide a convenient way for retail investors to get exposure to Bitcoin without having to directly buy and store cryptocurrency themselves. This, of course, further increased the demand for Bitcoin and other cryptocurrencies in the process.

There has been speculative interest in Bitcoin as well. This comes from the potential for high returns. The recent economic uncertainty that comes with inflation or volatility in traditional markets has caused investors to seek alternative assets, like Bitcoin, as a hedge. Investors often look for these types of assets that store value and have the potential for significant appreciation. And Bitcoin, as it has a limited supply and decentralized nature, is attractive in this light.

What could happen next?

While this might be interesting now, it could change in the future. Institutional adoption could continue, and more ETFs and other investment vehicles could introduce more access to Bitcoin easily. This could fuel further demand and drive up the price.

Regulatory changes of clearer guidelines could provide more certainty, leading to more retail and institutional investors as well. However, this could also be the opposite, as less clear guidelines and increased scrutiny could cause the price to drop.

Other changes might include the change in the market and economic futures. Since Bitcoin is being used as a hedge, as the market and volatile economy improve, investors could get out and put money elsewhere. Bitcoin overall is seen as volatile, so share price corrections aren’t exactly uncommon. Therefore, it might be best to look at investing in companies that invest in Bitcoin and other areas.

A strong option

Instead of just investing in Bitcoin, even through an ETF, it might be good to invest in companies that also invest in technological advancement. For instance, there are companies investing in the storage of Bitcoin as well as data in general.

One company is Hut 8 (TSX:HUT). Hut stock used to mine for cryptocurrency, and that was it. However, it’s since expanded into data storage. It’s been growing both from the increase in Bitcoin prices as well as the increase in its data centre use.

The company recently reported substantial growth in earnings and adjusted earnings before interest, taxes, depreciation, and amortization. However, this was only from the last six months of 2023. Even more growth has come in 2024. And that should continue to be the case in 2024, as Bitcoin increases, and its data centres earn more clients.

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.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Bitcoin. The Motley Fool has a disclosure policy.

More on Tech Stocks

clock time
Tech Stocks

Up 47%, Is it Time to Buy Payfare Stock?

Payfare (TSX:PAY) stock has been rising higher in the last six months after dropping significantly since 2021. Is it time…

Read more »

Clock pointing towards a 'sell' signal
Tech Stocks

2 Canadian Growth Stocks to Buy and 1 to Sell

Financial growth stocks like EQB Inc (TSX:EQB) are much cheaper than tech growth stocks.

Read more »

Target. Stand out from the crowd
Tech Stocks

The Most Expensive Stock in Canada Is a Top Buy Today

This stock might be expensive, but it's proven time and again that it's worth its weight in gold. And it's…

Read more »

Upwards momentum
Tech Stocks

CSU Stock: The Best Canadian Growth Stock Pick in Tech?

Constellation Software (TSX:CSU) stock could be in for a bit of dip over the nearer term.

Read more »

Volatile market, stock volatility
Tech Stocks

Nvidia Stock Is Falling Into a ‘Correction.’ Time to Buy the Dip?

Nvidia (NASDAQ:NVDA) has seen shares surge in the last year, but have entered correction territory after dropping over 10% from…

Read more »

thinking
Tech Stocks

Is Constellation Software Stock a No-Brainer Buy?

Even the most consistent stocks are not infallible and may be vulnerable against certain conditions. So, it’s worth researching even…

Read more »

grow dividends
Tech Stocks

Constellation Software’s Heirs: Lumine Group and Topicus Stock Take Flight

Check out Constellation Software stock's spin-outs Lumine Group (TSXV:LMN) and Topicus.com (TSXV:TOI) stock as they enter high growth mode this…

Read more »

potted green plant grows up in arrow shape
Tech Stocks

Why BlackBerry Stock Bounced Back This Week

BlackBerry (TSX:BB) stock saw shares rebound after the company announced a new partnership with AMD (NASDAQ:AMD) stock.

Read more »