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Bitcoin is currently trading near its all-time high of US $ 19,450 (CA $ 25,453). Over the past month, the cryptocurrency has increased by 50%. Indeed, this week alone, it added tens of billions of aggregate value. Investors are optimistic that it could break its record and reach a new all-time high by the end of the year.
This is great news for early investors who already have exposure. However, if you’re still looking for a way to add cryptocurrencies to your wallet, here’s what you should know.
Why is Bitcoin growing?
Some investors may recall the boom-bust cycles that Bitcoin went through in the past. In 2017, the popular digital currency increased by 1,745% in just a few months. Eventually, the digital currency plummeted to $ 3,400 by the end of 2018.
This time around, the market is much more mature and some experienced investors are involved. The reason Bitcoin is growing is because institutional investors are starting to recognize the value of this digital currency. Hedge fund legends like Stanley Druckenmiller and Paul Tudor Jones invested in it this year.
Meanwhile, tech giants like Square is PayPal they have added cryptocurrencies to their platforms and balance sheets. This increased demand from tech giants and professional investors is likely the reason Bitcoin is on the rise again.
Invest in Canadian Bitcoin stocks
Canadians can probably buy Bitcoin directly through their regular trading app. However, investors looking for an extra layer of security could invest in a Bitcoin mining stock instead.
HIVE Blockchain Technologies (TSXV: HIVE) is a good example. The stock has grown 622% year to date, closely following the rise in Bitcoin’s value. The company owns and operates server farms that generate Bitcoin by solving complex mathematical puzzles (a process called mining).
Over the years, HIVE has generated millions of dollars worth of BTC and Ethereum. The company sells some of these newly generated cryptocurrencies to fund its expansion. Currently, it operates facilities in Canada, Sweden and Iceland.
However, the company also retains some of the cryptocurrency as long-term investments. As of September 2020, HIVE would have had $ 18.3 million (CA 24 million) in cash, Bitcoin, Ethereum, and other digital currencies on its books. As cryptocurrencies increase in value, this reserve is expected to increase along with it.
This is what makes HIVE a good proxy for Bitcoin and the cryptocurrency space.
Another proxy is 8 Mining Hut (TSXV: HUT). Unlike HIVE, Hut only operates in Canada, specifically Alberta. The company has mined a total of 12,305 Bitcoins since its inception and has stored over 3,496. At the current market price, the company’s cryptocurrency reserves are worth US $ 62.9 million or CAD $ 82.3 million. Meanwhile, the company’s market capitalization is $ 130 million.
Hut 8 is likely an overlooked opportunity for investors seeking exposure to Bitcoin.
Bottom line
Bitcoin is on the rise again. Interest from hedge fund legends and tech giants is likely fueling this latest boom. Canadian investors can add neglected Bitcoin mining stocks like HIVE or Hut to gain exposure.
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Silly collaborator Vishesh Raisinghani owns Bitcoin and Ethereum. Tom Gardner owns shares in Square. The Motley Fool owns stock and recommends PayPal Holdings and Square and recommends the following options: Long January 2022 $ 75 Call on PayPal Holdings.
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