Bitcoin surpassed $60,000 on Wednesday, approaching its all-time record and continuing its rapid rise since the approval of a new type of asset pegged to cryptocurrencies.
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As of early Wednesday afternoon, Bitcoin was trading at around $60,301 in London, narrowing the gap from its all-time high of $68,991 reached in November 2021.
The expectation of the approval of a new investment product after the Bitcoin price had contributed to the price increase in recent months, which had largely fallen at the end of 2022 after the bankruptcy of several industry giants.
Since its approval on January 10 by the US Securities and Exchange Commission (SEC), this new form of investment, a Bitcoin-indexed index fund (ETF), theoretically allows a wider public to invest in these cryptocurrencies without having to hold them directly.
The start of marketing of this product “triggered a new wave of optimism and caused transaction volumes to skyrocket,” notes Mikkel Morch from the ARK36 special fund.
Some investors looking to get their shares back had initially sparked a wave of massive withdrawals from the GBTC (Grayscale Bitcoin Trust) fund after it was converted into an ETF.
But as the selling frenzy subsided, inflows into U.S. Bitcoin ETFs such as that of asset management giant BlackRock increased.
According to calculations published on Monday by the asset manager CoinShares, investment products related to publicly traded cryptoassets have attracted around 5.7 billion US dollars (around 5.15 billion euros) since the beginning of the year.
“Growing institutional support”
In further evidence of “the growing institutional support fueling the price rise,” said Morch, software company Microstrategy announced on Monday that it had purchased 3,000 additional Bitcoins (equivalent to $155 million at current prices). to Microstrategy founder Michael Saylor), bringing his total Bitcoin holdings to 193,000 Bitcoins (around $6.09 billion).
Bitcoin's price has also been boosted by expectations that the US Federal Reserve (Fed) and other major central banks will begin cutting interest rates this year, reducing the attractiveness of the dollar and US Treasuries for investors becomes.
Finally, according to Tickmill's James Harte, prices are also supported in the short term as major industry players invest in Bitcoin ahead of a technical phenomenon called “halving” expected in April.
Bitcoin is created – or “mined” – as a reward when powerful computers solve complex problems. But the amount of Bitcoin is limited and about every four years the reward for the “miners” who mine Bitcoin is halved.
The upcoming halving is expected to slow the rate at which new Bitcoins enter the market, thereby strengthening their value.
Since the last halving in May 2020, “the price of Bitcoin has increased by more than 600%,” notes Simon Peters, analyst at eToro, and although the percentage increase decreases between each cycle, “it is very likely that the price will peak achieved.” somewhere in the six-figure range.