Bitcoin surged to an all-time high Tuesday, shaking off a
more-than-two-year rut that had put the future of the entire crypto ecosystem
in question.
Bitcoin, the world’s oldest — and by far the largest —
digital currency, traded above $69,000 Tuesday morning, topping the previous
record of $68,789 reached on November 10, 2021, according to CoinMarketCap.
Over the past several months, bitcoin’s rally has been
turbocharged by US regulators’ approval of exchange-traded funds pegged to the
digital asset, which created an on-ramp for more traditional investors to
incorporate bitcoin into their portfolios.
That approval took years of lobbying by crypto firms, and
was granted only grudgingly by the Securities and Exchange Commission after a
court ruled the regulator’s reasons for rejecting bitcoin ETF applications were
“arbitrary and capricious.”
After just a month, the ETFs had spurred more than $4.2
billion in net new flows, according to Bloomberg.
ETFs are investment tools that track a basket of assets but
trade like a stock. Part of the appeal of a bitcoin ETF is that investors can
get exposure to bitcoin through their usual brokerage firm, rather than having
to set up a digital wallet through a cryptocurrency exchange.
Bitcoin is a bellwether for the broader $2 trillion crypto
industry, whose reputation has been pummeled by a series of negative
headline-making events: high-profile bankruptcies of exchanges and lenders,
volatile price swings and the prosecution of Sam Bankman-Fried, a onetime
crypto celebrity who was convicted in November of stealing billions of dollars
from customers on his FTX exchange, which collapsed in late 2022.
“To fully appreciate this new record, we need to acknowledge
the cascade of events that shook the crypto market to the core in 2022 and 2023
and marvel at bitcoin’s ability to perennially bounce back from adversity,”
said Antoni Trenchev, co-founder of crypto lender Nexo Capital, in a statement
Tuesday.
Bitcoin, which accounts for more than half of all cryptos in
circulation, is up more than 200% over the past 12 months, according to
Coin Market Cap.
The bitcoin rally has also been fueled by the crypto
faithful, who are anticipating even more gains this spring following an event
known as the “halving.” Roughly every four years, the number of bitcoin
entering circulation gets cut in half — a built-in feature of the
cryptocurrency, which is finite by design. As bitcoin approaches scarcity, the
value is expected to rise.
The timing of bitcoin’s new record is noteworthy, Trenchev
said, because the asset usually hits a new high after the halving. But the ETF
bump accelerated the rally.
“This could mean we are facing an earlier, sharper and
shorter bull cycle — followed by a painful and drawn-out bust,” he said.
