Crypto is arguably the first thing that comes to most investors’ minds when discussing volatile investments. And even though cryptocurrency stocks are one of the more stable ways of investing in the crypto market, they do mimic the vulnerability of the underlying crypto assets.
But there is an upside to this volatile nature of the crypto market — powerful gains in a relatively short period. This is one of the reasons why everyone is talking about Bitcoin (CRYPTO:BTC) right now.
Bitcoin bull run
Bitcoin crashed hard in 2022, and while it slumped for a while, the recovery was swift. It climbed a bit in 2023, but the real growth happened in the last quarter of 2023 and the first quarter of 2024, pushing Bitcoin to a new high point beyond US$70,000.
It’s trading at US$63,000 right now. One of the most significant factors fueling this growth is the U.S. regulatory approval for Bitcoin exchange-traded funds (ETFs).
Bitcoin ETFs have been around for a few years in Canada but face regulatory challenges. Now that their creation and trading have been approved, Bitcoin has become accessible to a larger audience. Bitcoin ETFs offer a much more direct exposure to the underlying crypto and its performance compared to crypto assets, which may offer diminished or magnified returns compared to the underlying crypto.
This bull run and the optimism around the crypto are why everyone is talking about Bitcoin. As ETFs, the crypto may also get more attraction from institutional investors, which may enhance its attraction.
Bitcoin future
It’s not clear whether this bull market phase will continue. There are signs of a waning momentum, and Bitcoin has lost about 12% in the last few days. It might be a temporary slump or the first signs of a correction following the recent growth bout. Identifying these may be difficult, but it is critical to making an informed decision.
There are predictions about both: another bullish run and a strong bearish correction. Some experts suggest that Bitcoin can go down to the US$40,000 mark, while others believe that if the stock rallies, it can get quite close to the six-digit threshold. Geopolitical tensions are also impacting its demand and desirability.
Foolish takeaway
While buying Bitcoin itself is the best way to gain direct exposure to the trend this crypto might follow in the coming months, it may not be the best course for most Canadian investors.
If you want to leverage the momentum in a tax-deferred account and seek direct exposure, crypto ETFs are the next big thing. However, certain crypto stocks may offer better return potential and give you more time to exit if the trend reverses.
