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Bitcoin hits record high after UK approval of crypto asset
The price of the cryptocurrency surpassed $72,000 on Monday.
March 11, 2024, 11:13 a.m. ET
• 5 minutes of reading
Bitcoin flew to a record high of more than $72,000 on Monday after a financial regulator United Kingdom has given the green light to a cryptocurrency-backed investment vehicle.
Bitcoin hit $72,166 in early trading Monday, just days after surpassing a previous high of nearly $69,000 from November 2021.
After crossing this threshold last week, the price of bitcoin fell 10% before rebounding to its current levels.
The Financial Conduct Authority, the British agency responsible for regulating financial activity, said it will not object to exchanges forming a UK-listed market segment for crypto-backed Exchange Traded Notes, or cETNs.
Bitcoin has soared over the past two monthsABC News, Yahoo Finance
Soon-to-be-available financial instruments allow traders to buy and sell assets whose price fluctuates in concert with a given cryptocurrency.
Publicly traded assets allow traders to essentially invest in cryptocurrency, but without the hassle or technical challenge of acquiring a cryptocurrency itself.
Despite the approval of cETNs, the Financial Conduct Authority said the products would remain unavailable to retail investors and warned traders of the risks associated with cryptocurrency investments.
“The FCA continues to remind people that cryptoassets are high risk and largely unregulated. Those who invest should be prepared to lose all their money,” the agency said. said in a report.
The movement follows a similar movement decision by the U.S. Securities and Exchange Commission in January, when the agency approved Bitcoin Exchange-Traded Funds, or Bitcoin ETFs.
Similarly, a Bitcoin ETF allows investors to purchase an asset that tracks the price movement of Bitcoin without investing funds directly in the cryptocurrency.
Gary Gensler, Chairman of the United States Securities and Exchange Commission (SEC), at SEC headquarters in Washington, DC, January 9, 2024. TJ Kirkpatrick/Bloomberg via Getty Images, FILE
After the SEC approved Bitcoin ETFs, the price of Bitcoin surged higher, drawing energy from an influx of new investments.
Shortly after the SEC approved the new investment option, a host of Bitcoin ETFs became available, including offerings from traditional companies such as Fidelity and Franklin Templeton.
New crypto alternatives have unleashed billions of dollars of investment in a matter of weeks, Bryan Armour, director of passive strategies research at financial firm Morningstar, said previously ABC News. The top nine Bitcoin ETFs received a total of $10 billion in the first seven weeks, Armor said.
Since Bitcoin ETFs were approved on January 10, the price of Bitcoin has surged 54%.
Despite the breakneck pace of gains in recent weeks, bitcoin has a history of significant price volatility.
Immediately after the approval of the Bitcoin ETF, for example, the price of Bitcoin fell 15% before rebounding. Over the past five years, bitcoin has fallen more than 40% four times, Armor previously told ABC News.
An ETF is a collection of securities that allows investors to bet that the price of an underlying asset will increase without purchasing that asset.
For example, a gold ETF allows individuals and institutions to bet on the price movement of the precious metal rather than purchasing, transporting and storing the physical item.
A Bitcoin ETF, in turn, allows investors to access the cryptocurrency market without facing the technical hurdles and fees associated with navigating a crypto exchange.