Bitcoin has cracked vertically and continues its rapid recovery, nearing new all-time highs.
The digital token rose 8% to $67,310 on Monday, well above its $44,000 valuation at the beginning of the year and less than $2,000 away from surpassing its all-time high of about $69,000 set in November 2021. Ta.
What's fueling the rally? Cryptocurrency watchers say Bitcoin's soaring price is partly due to increased demand for the so-called currency. Spot Bitcoin Exchange Traded Fund. Experts say ETFs, which allow investors to tap into cryptocurrencies in a lower-risk way than in the past, have led to huge cash inflows this year.
Joel Krueger, market strategist at digital currency exchange LMAX Group, told CBS Money Watch that investors are starting to take note of the fact that Bitcoin can be treated as an uncorrelated asset, and this is a great asset for portfolio diversification. It's fascinating,” he said.
Spot Bitcoin ETFs allow investors to gain direct exposure to Bitcoin without owning any Bitcoin. Unlike a regular Bitcoin ETF, whose underlying asset is a Bitcoin futures contract, the underlying asset of a Spot Bitcoin ETF is Bitcoin. Each Spot Bitcoin ETF is managed by a company that issues shares of its Bitcoin holdings purchased through other holders or through licensed crypto exchanges. The shares are listed on traditional stock exchanges.
The U.S. Securities and Exchange Commission approved the sale of a spot Bitcoin ETF in January. Since then, investors have deposited about $7.35 billion into 11 different funds available, Bloomberg reported on Monday. Some of the world's largest institutional investors, such as BlackRock and Fidelity Investments, now offer spot Bitcoin ETFs.
Bitcoin's price rise began a few months before 2023, rising to a 19-month high of around $41,000 in December. Analysts at the time said the surge was driven by three main factors: expectations for SEC approval of spot ETFs, expectations for Fed interest rate cuts, and expectations for a halving event that would cut Bitcoin mining rewards in half. I thought that this was due to a number of factors.
Indeed, as Insider's investment correspondent Laila Meydan told CBS News in December, when Bitcoin hit a then-19-month high of $41,000, the price of Bitcoin continued to soar. However, this does not mean that the instability of virtual currencies will decrease in the slightest. .
“It doesn't mean that cryptocurrencies will skyrocket and stay high,” Maidan said. “It’s still very volatile and there are a lot of people trading all the time.”
Still, Bitcoin's resurgence is welcome news for crypto investors, many of whom saw their asset values plummeting in 2022 after the collapse of FTX and other crypto exchanges. Because Bitcoin is the world's largest cryptocurrency in terms of both trading volume and mining volume, it is often looked to by financial analysts as an indicator of the overall health of the cryptocurrency industry.
