Bitcoin surged past the $60,000 mark on Wednesday, nearing its all-time high and sustaining an upward trajectory since the approval of a novel investment product linked to the cryptocurrency.
At 1325 GMT, bitcoin traded at approximately $60,301, edging
closer to its record peak of $68,991 reached in November 2021, a level some
analysts believe could soon be attained.
The recent surge in bitcoin's
value can be attributed to the approval, on January 10, by US securities
regulators of exchange-traded funds (ETFs) indexed to the cryptocurrency. These
ETFs theoretically offer a broader public the opportunity to invest in bitcoin
without the need to directly hold the digital currency, although the funds themselves
do invest in bitcoin.
The anticipation and subsequent
approval of these investment products contributed to a rise in bitcoin's price
in recent months, following a decline in late 2022 due to the bankruptcy of
several major cryptocurrency entities.
Mikkel Morch of specialist fund
ARK36 highlights the impact of the US launch of ETFs or ETPs (exchange-traded
products), stating that it has "injected a fresh wave of optimism,
propelling trading volumes and spotlighting crypto-linked firms." These
investment instruments are comparable to stocks or mutual funds in terms of
accessibility for everyday investors.
While some investors initially
triggered mass withdrawals from the GBTC (Grayscale Bitcoin Trust) fund after
its conversion into an ETF, flows into US bitcoin ETFs, including BlackRock's,
increased once the selling frenzy subsided.
According to calculations by
asset manager CoinShares published on Monday, exchange-listed
cryptoasset-linked investment products have attracted around $5.7 billion since
the beginning of the year.
Highlighting the growing
institutional support, software company MicroStrategy announced on Monday that
it had acquired an additional 3,000 bitcoins, bringing its total bitcoin
holdings to 193,000 bitcoins (about $6.09 billion).
Analysts, such as James Harte
from Tickmill, note that major industry players investing in bitcoin ahead of
the upcoming "halving" event, expected in April, are contributing to
the current price buoyancy. This event, occurring roughly every four years, is
anticipated to slow the issuance of new bitcoins, potentially increasing demand
and, consequently, prices.
Nigel Green, head of financial
advisory firm deVere Group, acknowledges the speculative nature of
cryptocurrencies but suggests that the significant interest in spot ETFs and
the impending halving event could sustain the current momentum, potentially
propelling bitcoin beyond the $69,000 mark.
The surge in bitcoin's value
has also been influenced by optimism surrounding potential interest rate cuts
by the US Federal Reserve this year as inflation eases.
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