Crypto-mania is set to strike again as Bitcoin approaches an all-time high, breaking past $68,600 after two years of low numbers. The Bitcoin price surge was the highest witnessed by the market since the November 2021 peak at $68,999.99 according to Reuters. The future of crypto suddenly feels more secure following an inflow of funds in recent months, largely thanks to Bitcoin US regulators who approved exchange-traded funds in association with the cryptocurrency. This decision made it easier for a new list of investors to enter the trading field without fully committing to the cryptocurrency industry. The latest data by CoinGecko shows that the Bitcoin market value of $1.35 trillion USD, a definite rise from the $1.28 trillion USD market capitalization from November 2021.
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Will Bitcoin’s All-Time-High Be Surpassed?
Following Bitcoin US regulators’ approvals, 11 spot Bitcoin ETFs were launched in January and these have been the primary reason for the Bitcoin price surge. In less than a month, we saw Bloomberg reporting that there was more than $4.2 billion in net new flows as a result. Some of the largest and most well-known investment firms, such as BlackRock Inc. and Fidelity Investments, have drawn interest in this investment surge, attracting substantial inflows totaling around $7.35 billion. According to Fortune, the two firms have captured 79 percent of the total inflows for the “Newborn Nine,” which is what the group of approved ETFs are being tagged as. Despite reports of significant outflows as well, particularly with Greyscale Bitcoin Trust, traders appear unshaken in their convictions with regard to the strength of Bitcoins.
The Bitcoin price surge in connection with the US regulators is an association that needs to be studied in detail. The ETFs or exchange-traded funds that were approved received the go-ahead after significant lobbying by crypto firms that wanted to expand on the interest that many investors had in crypto but were unwilling to take the time to get into. The Securities and Exchange Commission (SEC) held off on their approval for quite a while and even the final decision was paired with reluctance. U.S SEC Chair Gary Gensler felt he was forced to submit the approval after a court ruling left them with little room to choose an alternate course of action.
According to CoinDesk, he stated, “It should in no way signal the commission’s willingness to approve listing standards for crypto asset securities, nor does the approval signal anything about the commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws.” Preaching caution, Gensler expanded on the risks of Bitcoin and the products that have their value tied to crypto. The SEC’s apprehension surrounding the cryptocurrency is quite valid but in the end, the approval of ETFs does secure the future of crypto a little more firmly.
What Are These Spot Bitcoin ETFs?
In a spot Bitcoin ETF, the ETF provider holds real Bitcoins, not futures contracts, to back the shares of the ETF. This means that investors in the ETF indirectly own a portion of these Bitcoins. Here each spot Bitcoin is managed by a specific firm that acquires coins from authorized cryptocurrency exchanges and other holders and manages the Bitcoin for investors rather than each investor managing their own digital wallet. The shares of these spot Bitcoin ETFs are then listed and traded on traditional stock exchanges. The possibility of crossing Bitcoin’s all-time high is a result of the availability of spot Bitcoin ETFs that have more money being poured into the cryptocurrency.
ETFs simplify the process of gaining exposure to Bitcoins without directly owning a specific Bitcoin portfolio through the cryptocurrency exchange. Instead, investors now have the option of buying shares of the Bitcoin ETF through the traditional brokerage accounts they already have some experience with. Apart from increased accessibility, ETFs make diversification easier and mitigate some of the risks of investment by allowing for a wider spread of investments. With baskets of assets that allow for exposure to Bitcoins as well as other assets, more investors become willing to brave the volatility for big returns. With high liquidity options and the convenience of familiarity, it is no wonder the Bitcoin price surge occurred following the peace made between Bitcoin and US regulators.
The future of crypto also appears to hold a “halving” event in-store. Every four years the rate of new Bitcoin creation is cut by 50 percent which reduces the Bitcoin supply. If the demand increases or even remains where it is currently. the price of these Bitcoins could see an upward surge. Finally breaking the spell of bad luck that had surrounded the Bitcoin market value, things seem to be looking up for investors with many optimistic that the uptick in value could be sustained for a while.
