On Wednesday, Bitcoin soared past the $60,000 milestone, inching closer to its all-time high and sustaining its upward trajectory following the approval of a novel investment vehicle linked to the cryptocurrency.
At 1325 GMT, Bitcoin was trading at approximately $60,301, nearing its record peak of $68,991 reached in November 2021, a level many analysts now anticipate revisiting.
Since receiving regulatory approval from US securities authorities on January 10, exchange-traded funds (ETFs) tied to Bitcoin have broadened the accessibility for the general public to invest in the digital currency indirectly. Although these funds invest in Bitcoin, they offer investors exposure without requiring direct ownership of the cryptocurrency.
The anticipation surrounding the introduction of this new investment instrument has contributed significantly to Bitcoin’s recent price surge, especially after the cryptocurrency market experienced a downturn at the end of 2022 following the collapse of several major crypto entities.
According to Mikkel Morch of specialist fund ARK36, the US debut of ETFs or exchange-traded products (ETPs) has “injected a fresh wave of optimism, propelling trading volumes and spotlighting crypto-linked firms.”
These investment vehicles function similarly to stocks or mutual funds, enhancing accessibility for retail investors.
Initially, some investors seeking to capitalize on their positions triggered a wave of mass withdrawals from the GBTC (Grayscale Bitcoin Trust) fund after its conversion into an ETF. However, once the selling frenzy abated, flows into US Bitcoin ETFs, including those offered by asset management behemoth BlackRock, surged.
Since the beginning of the year, exchange-listed cryptoasset-linked investment products have attracted approximately $5.7 billion, as reported by asset manager CoinShares.
Morch views the recent announcement by software company MicroStrategy, revealing its purchase of an additional 3,000 bitcoins (then valued at $155 million), as further evidence of “the growing institutional endorsement that’s fueling this rally” in Bitcoin prices.
Bitcoin’s scarcity narrative is also bolstered by major industry players investing in anticipation of the upcoming “halving” event scheduled for April. This event, occurring roughly every four years, reduces the rate at which new bitcoins enter circulation, consequently amplifying the cryptocurrency’s scarcity and potential value.
Nigel Green, head of financial advisory firm deVere Group, remarked, “Cryptocurrencies remain highly speculative, but the enormous interest in spot ETFs and the upcoming halving event… can be expected to continue to fuel the current momentum which could lead bitcoin to surpass the $69,000 mark.”
Additionally, Bitcoin has garnered support from optimism surrounding potential interest rate cuts by the US Federal Reserve amid easing inflation concerns.
