Bitcoin’s price soared above $60,000 on Wednesday, inching closer to its all-time high as investor confidence surged following the approval of a new type of investment vehicle linked to the cryptocurrency.
Reaching a peak of $61,360, Bitcoin is now within striking distance of its November 2021 record of $68,991, which some analysts now believe is attainable. This recent ascent comes after the U.S. approved the launch of exchange-traded funds (ETFs) in January, theoretically allowing a broader audience to invest in Bitcoin without directly holding it. These funds, however, still hold the underlying digital currency.
The anticipation of these new investment products had already contributed to a price increase in recent months, following a significant decline in late 2022 due to several high-profile crypto company bankruptcies.
Experts attribute the current upswing to the U.S. launch of ETFs and ETPs (exchange-traded products), which have “injected a fresh wave of optimism,” according to Mikkel Morch of ARK36, a specialist fund manager. This optimism has driven trading volumes and increased attention towards companies associated with cryptocurrencies.
Initially, some investors seeking to recoup losses triggered a wave of withdrawals from the Grayscale Bitcoin Trust (GBTC) fund in anticipation of its conversion into an ETF. However, once the initial selling pressure subsided, inflows into U.S. Bitcoin ETFs, such as the one offered by BlackRock, began to rise.
According to calculations by CoinShares, exchange-listed investment products linked to crypto assets have attracted a staggering $5.7 billion in investment since the start of 2024. This influx of capital, combined with renewed investor confidence, has propelled Bitcoin’s price to its current heights.
Overall, the approval of ETFs and a shift in investor sentiment appear to be the primary drivers behind Bitcoin’s recent price surge. Whether it can reach and surpass its all-time high remains to be seen, but the current momentum suggests a promising future for the world’s leading cryptocurrency.
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