Cryptocurrencies have passed through a difficult period since the final weeks of the previous year. Bitcoin, the world’s largest digital currency by market cap, peaked just under the US$69,000 mark in November 2021. The price of Bitcoin is trading just below the US$41,000 point as of mid-afternoon trading on March 21.
Gold and crypto have duked it out as safe havens in recent years. The Russia-Ukraine crisis has firmly put gold in the lead in this category. Bitcoin and its crypto peers have traded more in line with equities rather than as a contrarian pick. This could impact investor behaviour going forward. Indeed, the ongoing commitment to rate tightening from central banks may pose a serious threat to crypto prices going forward.
Canadian investors who want exposure to Bitcoin through an exchange-traded fund (ETF) should seek out the Purpose Bitcoin ETF (TSX:BTCC.B). This stands as the first physically settled Bitcoin ETF that is available to investors. Shares of this ETF have dropped 12% in 2022 as of mid-afternoon trading on April 21. The stock is down 27% in the year-over-year period.
Another potential headwind for the crypto space is the stretch of data breaches that has been suffered by the sector in 2022. Moreover, the economic consequences of the Russia-Ukraine conflict and subsequent Western sanctions could also complicate the crypto market. This is one of the many reasons I’m not looking to jump on this ETF in late March.
