The cryptocurrency market has been hit hard by volatility to start the final week of February. Bitcoin, which was set to challenge the $60,000 U.S. price mark over the weekend, has since fallen below $50,000 U.S. This came after Canada marked a milestone with the launch of the first bitcoin-focused exchange-traded fund.
The Purpose Bitcoin ETF (BTCC.B) launched on February 18. Shares of the ETF dropped 11% on February 23. The ETF offers investors the chance to buy and sell bitcoin on the TSX exchange. Moreover, TFSA and RRSP investors can also get in on the action and take advantage of bitcoin’s explosive potential. However, Canadian investors should also beware of its historic volatility.
What is behind the plunge in the cryptocurrency market to start the week? Elon Musk thrust himself into the spotlight with his $1.5-billion bet on bitcoin through Tesla (NASDAQ:TSLA). It has already won him a $1-billion profit over a few weeks. Bitcoin has also benefited from adoption from major payment processors like PayPal (NASDAQ:PYPL) and online investment management firms like WealthSimple.
Unfortunately, bitcoin has come under fire from some influential voices in recent days. Bill Gates, the founder of Microsoft (NASDAQ:MSFT) and an influential voice in the global health space, said that regular investors should be concerned about its risks. Janet Yellen, the former chairwoman of the Federal Reserve and now U.S. Secretary of the Treasury, called bitcoin “extremely inefficient”. These critiques have coincided with its recent plunge.
Canada’s first bitcoin ETF is exciting. However, investors should be very careful in this environment. It is no fun catching a falling knife, and bitcoin has looked overheated for some time.
