Why has Bitcoin rocketed to new all-time high of over $69,000?

Why has Bitcoin rocketed to new all-time high of over $69,000?

US regulators’ approval of spot ETFs in January 2024 paved way for substantial investments

A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken January 8, 2021. —Reuters

Bitcoin, the world’s largest cryptocurrency, has surged to a historic high, surpassing $69,000, breaking the previous record set in November 2021, BBC reported. 

This resurgence follows a tumultuous period in 2022 when Bitcoin’s value plummeted to $16,500. The recent price surge is attributed to major US finance giants investing billions in Bitcoin.

US regulators’ approval of spot Bitcoin Exchange-Traded Funds (ETFs) in January 2024 paved the way for substantial investments from financial powerhouses such as Blackrock, Fidelity, and Grayscale. 

These institutions have rapidly accumulated hundreds of thousands of bitcoins, exerting considerable upward pressure on the cryptocurrency’s value.

Professor Carol Alexander from Sussex University acknowledged the potential for Bitcoin’s price to climb further but cautioned about its notorious volatility. She emphasised the historical trend of price crashes affecting ordinary investors who entered the market during bubbles.

Bitcoin’s inception in 2009, driven by an anti-establishment ethos, aimed to create a decentralised form of currency. However, its recent surge is ironic, fueled by institutional investments from the very establishments it sought to challenge.

The imminent “halving” event in April is anticipated to impact Bitcoin’s value, historically accompanied by price surges, according to Prof. Alexander.

Despite reaching around $69,200 on Tuesday, Bitcoin experienced a slight decline to trade at approximately $67,000. Over the last month, its value has spiked by over 50%, highlighting the cryptocurrency’s wild fluctuations.

While this surge brings celebration for Bitcoin holders, history cautions against complacency. The cryptocurrency’s value previously plunged to 18-month lows in June 2022 and faced challenges, including the collapse of the FTX exchange in November 2022.

Internationally, El Salvador’s President Nayib Bukele has embraced Bitcoin, investing over $100 million of public funds to purchase nearly 3000 bitcoins in recent years, now yielding a 60% increase in value. 

The dynamic nature of Bitcoin’s value remains a focal point for both investors and nations embracing this digital asset.

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