The cryptocurrency space enjoyed a huge bull market after the beginnings of the COVID-19 pandemic shocked markets and sent investors scrambling. Bitcoin, the largest digital currency by market capitalization, rose to an all-time high in November 2021. However, its value was cut in half by late January 2022.
Since then, Bitcoin and many of its peers in the crypto space have suffered steady declines. The spot price of Bitcoin was worth US$21,971 as of close on March 7, 2023. That is compared to its all-time high of $68,789.63. The crypto space has been throttled in the face of rising interest rates. Unfortunately, the United States Federal Reserve is expected to continue its aggressive rate tightening policy.
Purpose Bitcoin ETF (TSX:BTCC.B) is a Bitcoin focused exchange-traded fund (ETF) that launched in February 2021. The launch appeared to be perfect timing as Bitcoin surged to record levels. Investors who scooped up this ETF right after its debut have been punished by the crypto bear market.
It is difficult to be optimistic about the cryptocurrency market as we move into the second week of March. The United States SEC began a wave of regulatory actions targeting Kraken, a top crypto exchange. Investors should prepare for more volatility as Bitcoin and its peers in the crypto space are set to battle more headwinds in the first half of 2023.
I’m not ready to snatch up shares of this ETF or jump back into the crypto market at large at this stage. There are simply too many risks to consider in a broader market that is already facing major challenges.
