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Bitcoin reaches record highs. That’s what’s driving the price up.
The price of bitcoin has reached a record high, continuing its rapid recovery that began in late 2023.
The digital token rose to $68,818 early Tuesday morning, well above its $44,000 valuation at the start of the year. Bitcoin’s rapid rise has also helped push 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 surging on so-called spot bitcoin exchange traded funds. ETFs, which allow investors to engage in cryptocurrencies in a less risky way than ever before, have attracted a huge influx of money this year, experts said.
“Investors are becoming interested in the fact that bitcoin can be treated as an uncorrelated asset, which makes it extremely attractive for portfolio diversification,” Joel Kruger, a market strategist at the currency exchange, told CBS MoneyWatch digital LMAX Group.
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A spot bitcoin ETF allows investors to gain direct exposure to bitcoin without holding it. Unlike regular bitcoin ETFs, where bitcoin futures contracts are the underlying asset, bitcoins are the underlying asset of a bitcoin spot ETF. Each bitcoin spot ETF is managed by a company that issues shares of its 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 in a win for the cryptocurrency industry
The United States Securities and Exchange Commission approved the sale of spot bitcoin ETFs in January. Since then, investors have deposited approximately $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 bitcoin spot ETFs.
Bitcoin’s price rally began months earlier in 2023: its price it rose to a 19-month high in December at around $41,000. Analysts at the time attributed the surge to three main factors, including the SEC’s anticipated approval of spot ETFs, anticipation of Fed rate cuts in 2024, and the upcoming launch of the crypto token. halving event, where the reward for mining bitcoin is halved.
To be sure, bitcoin’s continued rise in prices doesn’t make the cryptocurrency any less volatile, as Insider’s investment correspondent Laila Maidan told CBS News in December, when the cryptocurrency topped $41,000, than at era was its highest value in 19 months. .
“This does not mean that cryptocurrencies will skyrocket and stay high,” Maidan said. “It’s still volatile and there are a lot of people who will always trade it.”
However, bitcoin’s resurgence is good news for cryptocurrency investors, many of whom have seen their assets plummet in value in 2022 following the collapse of FTX and other cryptocurrency exchanges. As the world’s largest cryptocurrency, both in terms of trading volume and largest number of assets mined, bitcoin is often viewed by financial analysts as an indicator of the overall health of the cryptocurrency industry.
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