Is It Too Late To Get Into Bitcoin?

Whether you have been watching it closely or not paying attention at all, Bitcoin has resumed its massive and impressive long-term rally, recently breaking above the previous all-time high near $110,000 (US$ $) per Bitcoin. At the time of this writing, Bitcoin’s new record high is just above $123,000 per coin, and its current price sits just below $120,000, to give a reference point to where it is whenever you are reading this.

As there is still plenty of skepticism about the intrinsic value or actual utility of Bitcoin, a large portion of the population will likely never have any interest in owning any directly, nor allocating any portion of their portfolio towards it. However, Bitcoin is starting to see more widespread buying from hedge funds and pensions, and some central banks are even starting to consider holding it as a reserve asset, similar to how most of them hold gold (aside from Canada, who previously sold their gold reserves and currently have none).

It seemed ridiculous back in 2013 when Bitcoin first hit the $1,000 level and became worth almost as much as an ounce of gold at the time. Ever since the price of Bitcoin overtook the price of gold in 2017, Bitcoin has skyrocketed and continued to widen its lead over gold. Bitcoin’s price quickly broke through $10,000, eventually crossing the $100,000 threshold, and now people are speculating whether it could possibly be $1 million (or even higher) per coin at some point in the distant future.

While the high price makes it quite prohibitive to buy a single bitcoin, similar to buying a single “Class A” share of Berkshire Hathaway (which currently trades for over $700,000), you can buy fractions of a Bitcoin in the same way as how some exchanges have started offering fractional shares of individual stocks. Bitcoin’s price is also following a similar path as Berkshire’s shares, just at a much faster pace, as Berkshire went from $290 per share in 1980, to crossing the $100,000 mark in 2006. Seeing Berkshire run from $100,000 that year, to over $800,000 per share this year, certainly makes it seem possible that Bitcoin’s price could continue to follow Berkshire’s ascent.

The Investment Landscape

Recent regulatory approvals of new investment products have made it much easier to gain exposure to Bitcoin and other cryptocurrencies. This in turn has likely fuelled the recent take-off as bigger investors have started buying, and are buying in large quantities.

Not many people know Canada was ahead of the US in approving Bitcoin and other cryptocurrency ETFs. The world’s crypto community was eagerly anticipating changes in laws that allowed the creation of Bitcoin and Ether ETFs in the US, while those ETFs were already available in Canada, giving Canadian investors a head-start over their southern counterparts.There are now multiple different options for adding exposure to Bitcoin in your portfolio, other than holding it directly through a wallet or cryptocurrency exchange:

1: ETF’s that own and directly hold Bitcoin

2: Bitcoin “Yield” ETFs

these are Exchange Traded Funds that own and hold Bitcoin, and write call options against those holdings to generate income which they pay to unitholders on a monthly basis, similar to a dividend (except more frequent)shares of Strategy (formerly known as MicroStrategy) An indirect method to invest in Bitcoin, as Strategy is a company that primarily just holds a lot of Bitcoin (and is continually buying more)Shares of Strategy are also one of the few options that investors have to indirectly get Bitcoin exposure that are in countries that haven’t approved Bitcoin ETFs, which is helping to provide demand for the shares

3: Yield Share” ETFs

These ETFs only hold shares of a single stock, such as Strategy, and write call options against those shares to provide monthly income distributions to unitholders Yields tend to be higher than Bitcoin Yield ETFs, and effectively give leveraged exposure to the price of Bitcoin as Strategy’s shares have been more volatile than the price of Bitcoin itself

Where the price of Bitcoin goes from here is anyone’s guess, but it will certainly be interesting to watch. If it is to continue marching higher, I would caution against expecting it to go up another 100X like it did after first hitting $1,000 per coin, given the levels it is currently at. However, the Bitcoin bull market certainly doesn’t appear to be over following its most recent breakout above its old record high price.

If you have missed out on the Bitcoin rally so far and have watched it rebound from numerous crashes only to recover and rocket to new record highs, it is not too late to consider adding a few percent to your portfolio. It has also never been easier to invest in, nor have you ever had as many options to gain investment exposure to it. Please reach out if you are interested in discussing your options for adding some Bitcoin, or any other cryptocurrencies, to your investment portfolio.

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^{This information has been prepared by Dennis Rubeniuk who is an Investment Advisor for iA Private Wealth Inc., and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this, post comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors.}

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