Bitcoin is on a vertical decline, its rapid resurgence continues and it is getting closer to breaking its all-time high.
The digital token climbed 8% on Monday to $67,310, well above its $44,000 valuation at the start of the year and less than $2,000 away from surpassing its record high of nearly $69,000 set in November 2021.
What is fueling the rally? Cryptocurrency watchers say Bitcoin is surging because so-called demand is surging Spot Bitcoin Exchange Traded Fund. Experts said ETFs, which allow investors to invest in crypto in a riskier way than ever before, have attracted a huge inflow of cash this year.
“Investors are attracted to the fact that Bitcoin can be treated as a non-correlated asset, which makes it extremely attractive for portfolio diversification,” Joel Kruger, market strategist at digital currency exchange LMX Group, told CBS MoneyWatch. “
Spot Bitcoin ETFs allow investors to get direct exposure to Bitcoin without having to hold it. Unlike regular Bitcoin ETFs, in which Bitcoin futures contracts are the underlying asset, Bitcoin spots are the underlying asset of Bitcoin ETFs. Each spot Bitcoin ETF is managed by a firm that issues shares of its own Bitcoin holdings purchased through other holders or through an authorized cryptocurrency exchange. Shares are listed on a traditional stock exchange.
The US Securities and Exchange Commission approved the sale of spot Bitcoin ETFs in January. Since then, investors have pulled in about $7.35 billion across the 11 different funds available, Bloomberg reported Monday. Some of the world’s largest institutional investors, including BlackRock and Fidelity Investments, now offer spot Bitcoin ETFs.
The rally in Bitcoin’s price started just a few months before 2023: its price reached a 19-month high of nearly $41,000 in December. Analysts at the time attributed this surge to three main factors, including anticipation of SEC approval for a spot ETF, anticipation of a Fed rate cut, and its upcoming halving event, in which the reward for Bitcoin mining was halved. Is.
To be sure, Bitcoin’s ongoing price rise doesn’t make the cryptocurrency any less volatile, as Laila Maidan, investment correspondent at Insider, told CBS News in December, when the cryptocurrency broke $41,000, which at the time was $19. That was its highest value in months. ,
“This doesn’t mean crypto is going to 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 decline in 2022 following the collapse of FTX and other crypto exchanges. As the world’s largest cryptocurrency, both in terms of trading volume and most mined, Bitcoin is often looked to by financial analysts as a gauge of the overall health of the crypto industry.
