Bitcoin soared to a record high of more than $72,000 on Monday after Britain's financial regulator gave the green light to investment vehicles backed by the cryptocurrency.
Bitcoin hit $72,166 in early trading on Monday, days after hitting an all-time high of more than $69,000 since November 2021.
After crossing that threshold last week, Bitcoin's price fell by 10% before recovering to current levels.
The Financial Conduct Authority, the UK agency tasked with regulating financial activity, said it “does not object” to exchanges forming a UK listed market segment for crypto-backed exchange traded notes (cETNs). Ta.
A soon-to-be-available financial product will allow traders to buy and sell assets whose prices fluctuate depending on a particular cryptocurrency.
Because the assets are public, traders can essentially invest in cryptocurrencies, but without the inconvenience and technical challenges of acquiring the cryptocurrencies themselves.
Despite approving cETN, the Financial Conduct Authority said cETN remains unavailable to retail investors and warned traders about the risks associated with investing in cryptocurrencies.
“The FCA continues to remind the public that crypto assets are high risk and largely unregulated. Investors must be prepared to lose all their money,” the agency said in a statement.
The move follows a similar decision by the U.S. Securities and Exchange Commission in January, which approved a Bitcoin exchange-traded fund (Bitcoin ETF).
Similarly, a Bitcoin ETF allows investors to buy an asset that tracks Bitcoin price movements without putting money directly into the cryptocurrency.
U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler at SEC Headquarters in Washington, DC, on January 9, 2024.
TJ Kirkpatrick/Bloomberg via Getty Images, File
After the SEC approved Bitcoin ETFs, the price of Bitcoin soared, fueled by an influx of new investments.
Shortly after the SEC approved the new investment option, a number of Bitcoin ETFs became available, including products from traditional companies such as Fidelity and Franklin Templeton.
Brian Armor, director of passive strategies research at financial firm Morningstar, previously told ABC News. Armor said the nine major Bitcoin ETFs received a total of $10 billion in the first seven weeks.
Since the Bitcoin ETF was approved on January 10th, the price of Bitcoin has increased by 54%.
Despite rising at a breakneck pace in recent weeks, Bitcoin has a record of significant price fluctuations.
For example, immediately after the Bitcoin ETF approval, Bitcoin prices fell by 15% and then rebounded. Over the past five years, Bitcoin has plummeted by more than 40% on four separate occasions, Armor previously told ABC News.
An ETF represents a bucket of securities that offers investors a way to bet that the price of the underlying asset will rise without having to buy it.
For example, gold ETFs allow individuals and institutions to invest in price fluctuations in the precious metal, rather than buying, carrying, and storing the physical object.
Bitcoin ETFs provide investors with access to the crypto market without facing the technical hurdles and fees associated with operating a crypto exchange.
