Bitcoin
Bitcoin hits record high. Here’s what’s driving up the price.
The price of bitcoin has reached a record high, continuing its rapid resurgence that began in late 2023.
The digital token rose to $68,818 on Tuesday morning, well above its $44,000 valuation at the start of the year. Bitcoin’s rapid rise also helped boost 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 rising in so-called spot bitcoin exchange traded funds. ETFs, which allow investors to get involved in cryptocurrencies in a less risky way than ever before, have attracted a huge flow of money this year, experts said.
“Investors are getting excited about the fact that bitcoin can be treated as an uncorrelated asset, which makes it extremely attractive for portfolio diversification,” said Joel Kruger, market strategist at digital currency exchange LMAX Group, to CBS MoneyWatch.
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A spot bitcoin ETF allows investors to gain direct exposure to bitcoin without holding it. Unlike regular bitcoin ETFs, in which bitcoin futures contracts 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 acquired through other holders or through an authorized 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 US Securities and Exchange Commission approved the sale of spot bitcoin ETFs in January. Since then, investors have deposited around $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.
The Bitcoin price rally began months earlier, in 2023: its price reached a 19-month high in December to about $41,000. Analysts at the time credited the rise to three main factors, including the anticipated approval of spot ETFs by the SEC, the anticipated Fed rate cuts in 2024, and the upcoming crypto token reduce by half event, in which the reward for bitcoin mining is halved.
To be sure, the continued rise in bitcoin’s price doesn’t make the cryptocurrency any less volatile, as Insider investment correspondent Laila Maidan told CBS News in December, when the cryptocurrency broke $41,000, which was its highest value in 19 months at the time. .
“This does not mean that crypto will skyrocket and stay high,” Maidan said. “It’s still volatile and there are a lot of people who will always trade it.”
Still, bitcoin’s resurgence is welcome news for crypto investors, many of whom saw the value of their assets plummet in 2021 following the collapse of FTX and other crypto exchanges. As the world’s largest cryptocurrency, both in terms of trading volume and largest mining, bitcoin is often seen by financial analysts as an indicator of the overall health of the crypto industry.
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