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Bitcoin hits record high. Here’s what drives the price up.
The price of bitcoin has reached a record high, continuing its rapid resurgence that began in late 2023.
The digital token hit $68,818 early Tuesday morning, well above its $44,000 valuation at the start of the year. Bitcoin’s rapid rise also helped drive up the price of Ether, Solana and other popular cryptocurrencies this week.
What’s fueling the rally? Cryptocurrency watchers say bitcoin is soaring in part because demand is increasing on the so-called Bitcoin spot exchange traded funds. ETFs, which allow investors to get into crypto in a less risky way than ever before, have attracted a huge influx of liquidity this year, experts say.
“Investors are attracted to the fact that bitcoin can be treated as an uncorrelated asset, making it extremely attractive for portfolio diversification,” said Joel Kruger, market strategist at the currency trading group. digital LMAX Group, to CBS MoneyWatch.
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A spot bitcoin ETF allows investors to gain direct exposure to bitcoin without owning it. Unlike traditional Bitcoin ETFs, in which Bitcoin futures are the underlying asset, bitcoins are the underlying asset of a spot Bitcoin ETF. Each spot Bitcoin ETF is managed by a company that issues shares of its own Bitcoin holdings purchased through other holders or through a licensed cryptocurrency. exchange. The shares are listed on a traditional stock exchange.
Federal Regulators Approve Nearly a Dozen Bitcoin ETFs, a Victory for the Cryptocurrency Industry
The United States Securities and Exchange Commission approved the spot bitcoin ETF sale in January. Since then, investors have deposited some $7.35 billion into the 11 different funds available, reported Bloomberg. Some of the world’s largest institutional investors, including BlackRock and Fidelity Investments, now offer spot Bitcoin ETFs.
Bitcoin price rise started months before in 2023: its price reached a 19-month high in December at around $41,000. Analysts at the time attributed the rise to three main factors, including anticipation of the SEC’s approval of cash ETFs, anticipation of Fed rate cuts in 2024, and the upcoming arrival of the crypto token. . reduce by half event, during which the reward for mining Bitcoin is cut in half.
To be sure, Bitcoin’s continued price surge doesn’t make the cryptocurrency any less volatile, as Laila Maidan, an investment correspondent at Insider, told CBS News in December, when the cryptocurrency topped $41,000 , which was its highest value in 19 months at the time. .
“This doesn’t mean crypto is going to skyrocket and stay high,” Maidan said. “It’s always volatile and there are a lot of people who will always trade it.”
Nonetheless, bitcoin’s resurgence is good news for crypto investors, many of whom have seen the value of their assets plummet in 2022 after the collapse of FTX and other crypto exchanges. As the world’s largest cryptocurrency, both in terms of trading volume and the most mined cryptocurrency, bitcoin is often considered by financial analysts as an indicator of the overall health of the mining industry. cryptography.
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