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Bitcoin (BTC) has set another all-time trading high this morning as it has topped the $72,000 level for the first time ever, bringing the world’s oldest cryptocurrency even closer to doubling in price during just the first few months of 2024.
Today’s gains bring bitcoin’s total year-to-date return to more than 70%, with a better than 4% gain just over the last 24 hours.
Last week, BTC broke through its previous all-time intraday trading high of $68,990, before ending the week right around $68,000.
Over the weekend, BTC continued its climb. Now bitcoin has not only regained all the ground it lost since the onset of crypto winter in May 2022, but it has also set multiple new all-time highs for the first time since November 2021.
In addition, Ethereum (ETH) has been gaining too. ETH is up more than 3% over the past 24 hours as well. The leading altcoin is now worth more than $4,000, which is a significant gain, but still shy of its pre-crypto winter high of more than $4,700, which was set in November 2021.
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Why Is Bitcoin Going Up Right Now?
The current bullish sentiment in bitcoin comes as the U.K.’s version of the U.S. Securities and Exchange Commission, the Financial Conduct Authority, or FCA, has said it is willing to consider the trading of bitcoin and Ethereum based exchange-traded notes, otherwise known as ETNs, in the U.K.
ETNs are similar to what the U.S. calls exchange-traded funds.
This news comes on the heels of continuing investor optimism surrounding the SEC’s January 10 approval of 11 spot bitcoin ETFs.
Spot bitcoin ETFs allow for the institutional trading of bitcoin at its spot, or current, price.
Previous bitcoin ETFs could only trade bitcoin futures. Futures are complex derivative instruments suitable for trading only by experienced investors.
Spot Bitcoin ETFs Have Sent BTC’s Price Soaring
Just as many investors expected before the SEC green light in January, opening the world’s oldest cryptocurrency to institutional investors has provided a significant price catalyst.
For example, BlackRock’s iShares Bitcoin ETF (IBIT), one of the 11 new spot bitcoin ETFs, purchased more than $778 million worth of BTC on March 6 alone. That added up to 12,600 bitcoins flowing into IBIT’s coffers, which reduced the world’s total available supply. Also, with the help of rising demand, IBIT’s purchase increased BTC’s overall value.
Mikkel Morch, founder of digital asset fund ARK36, says, “The positive momentum in the cryptocurrency space is further bolstered by the impact of spot bitcoin ETFs in the U.S.A., with very substantial funds continuing to flow in. This development, alongside the U.K.’s regulatory advancements, shows the growing recognition of cryptocurrencies . . . by Western financial authorities.”
In the wake of the SEC’s approval of the first U.S. spot bitcoin ETFs, BTC has jumped from under $50,000 at the time of approval to above $72,000.
Is Bitcoin Facing a Price Correction?
With the heights bitcoin has now reached, the fear of a price correction is percolating in some traders’ minds. Although bitcoin has been climbing steadily since the U.S. introduced spot bitcoin ETFs, cryptocurrencies, including bitcoin, have a history of extreme volatility.
Bitcoin and other cryptocurrencies suffered after a wave of bankruptcies, collapses and negative rulings rocked the crypto world in 2022.
First, there was Terra’s LUNA coin debacle, which kicked off crypto winter that May.
After a brutal summer for crypto investors, the collapse of leading crypto exchange FTX in November of that year looked like a fatal blow for cryptocurrencies.
Then, throughout 2023, both the SEC and Commodity Futures Trading Commission brought numerous regulatory lawsuits against some of the largest crypto exchanges and companies. Those suits hampered many exchanges and other crypto companies’ abilities to do business in the U.S., the world’s largest economy.
During that period, bitcoin dropped from its pre-crypto winter high of nearly $65,000 to a bottom of almost $16,000 before starting its recovery. That was a 75% swing in price in just over one year.
What Does Bitcoin’s Bounce Mean for Investors?
Although bitcoin appears to be in the midst of a significant bull run, there is of course no way to know how high the cryptocurrency will go before seeing another correction.
While it’s looking more and more like bitcoin is on a long-term rise again, traders in BTC and other cryptocurrencies are in unprecedented territory regarding several factors. Those include the geopolitical climate, economic indicators, crypto regulation and the Fed’s intentions regarding interest rates.
Cryptocurrency industry investors have learned that even in the best of times, predicting the short-term price action of digital assets is difficult. That holds particularly true in this market environment.
