The price of Bitcoin has soared to its highest point in 21 months, amid speculation that the US authorities are about to take steps to make the digital currency even more accessible.
It surged past the $45,000 mark, having increased 156 per cent during 2023, which proved to be a less volatile year for the currency. It managed to stage a comeback after dipping 65 per cent in value during 2022. In November 2021, the digital currency was trading at $69,000 for one coin.
This week’s boost came as investor speculation that the U.S. Securities and Exchange Commission will approve a bitcoin ETF.
ETFs – exchange-traded funds – are low cost trackers whose popularity boomed during lockdown. Trackers are investment products that follow the value of what they are tracking. These funds will go up and down according to the value of bitcoin and provide a cheaper entry point.
If the regulator does rubber stamp the move then millions more investors will be able to buy bitcoin.
The U.S. Securities and Exchange Commission has previously rejected applications to launch bitcoin ETFs in recent years, over fears the cryptocurrency market is too easily manipulated.
In recent months there have been increasing signs regulators are prepared to sign off on at least some of the 13 proposed bitcoin ETFs, with expectations the decision will likely come in early January.
Katharine Wooller, an independent digital asset specialist, said bitcoin had shown a promising start to the year, by surging over 10 per cent in value.
She said: “This is full of enthusiasm for the rumoured imminent approval of ETFs. Whilst there is a small element of ‘buy the rumour sell the fact’ the advanced stage of the SEC process is no mean feat, as it will open up a huge institutional market.”
Ether, the coin linked to the ethereum blockchain network, was 2.6 per cent higher at $2,414, its value rose by 90 per cent in 2023.
U.S. crypto exchange Coinbase rose 6.3 per cent and software firm and bitcoin investor MicroStrategy added 9.4 per cent.
Bitcoin is notoriously volatile meaning people can make very quick losses as well as very quick gains.
How would a bitcoin ETF work?
Exchange traded funds are collective investments which mirror or track an asset including commodities and currencies. Rather than own the currency investors will have exposure to any rises, or falls, in value.
Wooller added: “The approval of a bitcoin EFT will finally allow a plethora of institutional buyers to purchase Bitcoin; too long have the world’s largest investors being quietly dabbling (often whilst decrying the entire asset class!) and an endorsement from the SEC finally provides regulatory clarity and welcome gateway to digital assets.”
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