The News
Bitcoin’s value reached a new record of over $69,000 Tuesday following weeks of demand from U.S. exchange-traded funds (ETFs) — securities that give institutional and retail investors exposure to bitcoin without having to own it directly.
The cryptocurrency has climbed about 62% since the start of this year. After hitting the fresh high, its value then dropped to under $65,000, as investors rushed to sell.
The U.S. Securities and Exchange Commission reluctantly approved the first ETFs to hold bitcoin in January, after its attempt to reject them last year ended in a legal defeat.
That decision ultimately expanded mass-market accessibility of bitcoin, helping the crypto industry overcome a turbulent year marked by the bankruptcies of massive trading firms, including the collapse of Sam Bankman-Fried’s FTX exchange.
SIGNALS
Bitcoin price likely to stay lower before rising again
After hitting the high of $69,000, Bitcoin’s value dropped by 3.2% almost instantly as investors disagreed over its likely future value, according to CoinDesk. Individual traders are also racing to sell their shares at the record price, limiting its gains. Analysts believe the price of bitcoin will temporarily stabilize before surging to further highs. During past record-setting price surges, bitcoin’s value doubled in under three weeks, crypto entrepreneur Anthony Pompliano told CNBC. And in April, bitcoin will undergo “halving” — a technical event that takes place every four years, whereby bitcoin miners’ reward is cut in half, a process that was written into its code as a way of guarding against inflation and ensuring its public supply remains limited, Quartz explained. Previous halvings have coincided with soaring price increases. It’s “just hard to not say this is going much, much higher,” Pompliano said.
Restricting access to bitcoin funds becoming ‘hard to justify’
Analysts underestimated just how popular the SEC’s ETF approval would be, putting pressure on investment firms that do not already have cryptocurrency funds to start offering them, according to Blockworks, an investor news site. The total trade volume of bitcoin ETFs reached $22 billion in the week to March 1, one Bloomberg analyst posted on X. Wells Fargo and Bank of America have begun offering bitcoin ETFs to their wealth management clients, a move that underscores “the increasing acceptance of the products by mainstream firms.” However, many retail investors clamoring to invest in crypto are being denied by brokerages who still see the coins as a volatile and unpredictable bet. While major brokerages Fidelity and Charles Schwab have begun allowing investors to buy into bitcoin ETFs, Vanguard, the world’s second-largest investment fund, has not created any cryptocurrency products, writing in a January blogpost that “crypto is more of a speculation than an investment.” Other investment giants with ETFs are restricting access — a move that one researcher told Blockworks is becoming “hard to justify.”
