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Bitcoin Hits New High as Mainstream Money Flows into Cryptocurrencies
CNN New York —
Bitcoin hit an all-time high on Tuesday, ending a more than two-year rut that had called into question the future of the entire crypto ecosystem.
Bitcoin, the world’s oldest — and by far the largest — digital currency, traded above $69,000 Tuesday morning, surpassing the previous record of $68,789 set on Nov. 10, 2021, according to CoinMarketCap.
Over the past few months, the Bitcoin rally was boosted by U.S. regulators’ approval of exchange-traded funds indexed to the digital asset, which created an on-ramp for more traditional investors to incorporate bitcoin into their portfolios.
The approval required years of lobbying by cryptocurrency companies, and was only reluctantly granted by the Securities and Exchange Commission after a court ruled that the regulator’s reasons for rejecting Bitcoin ETF applications were “arbitrary and capricious.”
The first 11 “spot” Bitcoin ETFs — which track the real-time market price of the asset — were launched in January.
After just one month, ETFs had generated more than $4.2 billion in net new flows, according to Bloomberg.
ETFs are investment vehicles that track a basket of assets but trade like a stock. Part of the appeal of a Bitcoin ETF is that investors can get exposure to bitcoin through their usual brokerage firm, rather than having to set up a digital wallet through a cryptocurrency exchange.
Bitcoin is a bellwether for the broader $2 trillion crypto industry, whose reputation has been tarnished by a series of negative headline-grabbing events: high-profile bankruptcies of exchanges and lenders, volatile price swings, and legal proceedings against Sam Bankman-Frieda former crypto celebrity who was convicted in November of stealing billions of dollars from customers on his FTX exchange, which collapsed in late 2022.
“To fully appreciate this new record, we must acknowledge the cascade of events that shook the cryptocurrency market to its core in 2022 and 2023 and marvel at bitcoin’s ability to perpetually bounce back from adversity,” Antoni Trenchev, co-founder of crypto lender Nexo Capital, said in a statement Tuesday.
Bitcoin, which accounts for more than half of all cryptocurrencies in circulation, has risen more than 200% in the past 12 months, according to CoinMarketCap.
Bitcoin’s rally has also been fueled by crypto faithful, who expect even bigger gains this spring following an event. known as “halving.” Approximately every four years, the number of bitcoins entering circulation is halved – a built-in feature of cryptocurrency, which is limited by design. As bitcoin approaches scarcity, its value is expected to increase.
The timing of bitcoin’s new record high is notable, Trenchev said, because the asset typically hits a new high after the halving. But the rise in ETFs accelerated the rally.
“This could mean we are facing an earlier, sharper and shorter bull cycle, followed by a painful and prolonged crash,” he said.