NEW YORK (AP) — Bitcoin is having another moment. The world’s largest cryptocurrency soared to almost $35,000 this week, marking its highest point in nearly 18 months — and more than double the price seen at the start of 2023.
The value of cryptocurrency soared from $5,000 at the beginning of the pandemic to $68,000 in November 2021, according to FactSet, during a period of significant technological advancement. However, prices dropped after the Federal Reserve raised interest rates to combat inflation and the collapse of FTX, one of the leading crypto companies.
At the start of 2023, the value of one bitcoin dropped by over 75% and could be purchased for under $17,000. Yet, as inflation decreased, investors began to flock back to the market. Additionally, the downfall of major technology-based banks prompted more investors to shift towards cryptocurrency as they abandoned investments in Silicon Valley startups and other high-risk ventures.
Bitcoin is receiving a new surge of support due to the potential for a larger group of investors. Supporters of the industry believe that a new method of investing in bitcoin, at current market prices rather than futures, could simplify the process of entering the world of cryptocurrency and reduce some of the known risks involved.
There is increasing hope for the potential launch of bitcoin exchange-traded funds, which are investment securities that can be bought and sold like stocks.
Although federal regulators have not given their approval yet, there has been recent success for crypto fund managers who have applied for bitcoin spot ETFs. This has increased the likelihood of approval, possibly within the next few months.
The Court of Appeals for the District of Columbia has directed the Securities and Exchange Commission to review the ETF for Grayscale’s bitcoin fund. This decision comes after the company filed a lawsuit against the regulator last year for denying its application due to concerns about safeguarding investors and other matters. The SEC did not challenge this ruling.
According to Edward Moya, a market analyst at Oanda, the recent listing of BlackRock’s iShares Bitcoin Trust by the Depository Trust and Clearing Corporation (which handles market trades) has gained a lot of attention online on Monday. Moya believes that this could be a contributing factor to the recent surge in Bitcoin’s value.
The iShares Bitcoin Trust was temporarily taken down on Tuesday, but has since been restored as of Wednesday. According to a spokesperson for DTCC, the list includes both current and potential ETF securities. The spokesperson stated that iShares was re-added in August.
According to Moya and others, discussions on social media and false information can greatly affect cryptocurrency trading. Kaiko Research highlights a recent instance where the price of bitcoin briefly increased after crypto news source Cointelegraph mistakenly reported on the SEC approving iShares’ spot bitcoin ETF on X, previously known as Twitter. However, the post was quickly retracted.
According to Kaiko research analyst Riyad Carey, the recent increase in bitcoin’s value cannot be attributed to specific developments or individuals. Instead, it is a result of a larger market trend, particularly in anticipation of spot bitcoin ETF opportunities.
Even though there has been a lot of hype surrounding bitcoin, investing in cryptocurrency is still a risky decision. Moya and other experts consider it to be the most unstable type of asset due to its highly unpredictable changes in value. In other words, investors can experience losses as quickly as they gain profits.
FTX, a major crypto exchange, suffered a collapse that significantly damaged the public’s trust in the crypto industry and had a major impact on retail investors, according to Moya. The majority of crypto investment is now driven by institutional investors, such as hedge funds.
The speaker noted that there is renewed interest in the field, but it is not at the same level as before. They also mentioned that they are monitoring the development of regulations.
There is a lot of uncertainty. Although the value of bitcoin and the stock prices of crypto companies such as Coinbase and MicroStrategy have increased due to the possibility of a spot ETF approval, it is uncertain if this trend will continue. Approval from regulators does not guarantee ongoing profits.
“If the approval goes through, will we witness continued interest and high trading volumes with this ETF? However, if it fails to meet expectations, bitcoin may face challenges,” stated Moya. “I am cautiously optimistic in the short-term until we receive official confirmation.”
At approximately 12:30 p.m. Eastern Time on Wednesday, the value of bitcoin was $34,789.