Cryptocurrencies Bitcoin, Dash, Ethereum, Ripple and Litecoin.Florence Lo/Reuters
Bitcoin is back. After hitting more than US$65,000 in 2021, then sinking to near US$16,000 a year later, the price of BTC has shot back up this year. Greg Taylor is CIO of Purpose Investments, which runs Canada’s largest bitcoin ETF, and he says the Wild West haze around the cryptocurrency sector is clearing—and that’s good for investors.
1. Purpose launched the world’s first bitcoin ETF in February 2021, and the firm’s five cryptocurrency ETFs now hold about $2.6 billion. U.S. regulators only greenlit bitcoin ETFs this past January. Bitcoin was created in 2009 and, of course, some investors still chase price performance, says Taylor. But “net-net, over the past 10-plus years, it’s performed very well.”
2. Especially in the early years, bitcoin had an outlaw appeal. But Taylor says crypto has evolved into another real asset like gold and other precious metals. A lot of demand is now driven by high-level concerns about fiat money and central banks. “If central banks keep doubling the currency supply, what is my dollar worth over time?” he asks.
3. BTC still has more than half the crypto market capitalization, and the total number of coins will eventually be capped at 21 million. Every four years or so there is a halving, and the latest was in April. Online miners of BTC get only half the new coins they used to by solving a mathematical problem. “There is a map out there of when we get to a steady state,” Taylor says.
4. How much bitcoin should an individual hold? Like other investment professionals, Taylor says no holding should be all or nothing. Suppose you keep 5% of your portfolio in real assets. “Maybe you put 3% in gold and 2% in bitcoin,” he says. “It all depends on your asset allocation.”
5. The crypto world still has scandals—lurid ones, like the arrest, conviction and jailing of Sam Bankman-Fried. Those blowups attract the attention of lawmakers. Taylor notes that Purpose’s ETFs are regulated by the Ontario Securities Commission. “At the end of the day, that’s going to be good news—to see governments and regulators coming in.”
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