Bitcoin surged to a new record high on Tuesday, marking another milestone in the volatile journey of the world’s largest digital currency.
The price briefly exceeded $69,000, surpassing its previous all-time high of $68,990.90 set on Nov. 10, 2021, according to data from the CoinDesk Bitcoin Price Index as reported by the Wall Street Journal.
Bitcoin’s remarkable price surge over the past year has been fueled by regulatory approvals for exchange-traded funds (ETFs) in the digital currency space.
Previously, retail investors interested in trading digital currencies often had to navigate crypto exchanges, which could be intimidating for those unfamiliar with bitcoin. However, this changed in January when federal regulators authorized the trading of spot bitcoin ETFs for ordinary American investors, enabling them to buy and sell these ETFs in a manner similar to trading stocks.
This regulatory move significantly expanded access to bitcoin investing across a broader segment of the American population, including individuals who may not have fully grasped the concept of bitcoin or how to engage in transactions involving it. Consequently, trading activity picked up considerably.
The decision by the U.S. Securities and Exchange Commission (SEC) to permit the sale of ETFs marked a pivotal moment for the crypto market, according to Nathan McCauley, CEO and co-founder of Anchorage Digital, a crypto platform. McCauley emphasized that the current record price reflects the impact of providing the market with safe, secure, and compliant access to the asset class, with institutions increasingly entering the space.
SEC approves bitcoin ETFs, clearing way for public trading
ETFs, or exchange-traded funds, function as investment vehicles similar to mutual funds but are traded on exchanges like stocks. They typically mirror the performance of a specific index or a collection of assets such as stocks, bonds, or commodities. Unlike mutual funds, which are traded at a single price once a day, ETFs can be bought and sold throughout the trading day, with prices fluctuating in real-time.
Leading up to the SEC vote, there was heightened anticipation among investors, contributing to a surge in the price of bitcoin. Bitcoin, known for its volatility, had started the previous year trading at $17,000.
The newly approved spot-bitcoin ETFs are listed on highly regulated exchanges such as Nasdaq, the New York Stock Exchange, and the Chicago Board Options Exchange, according to Reuters. This regulatory oversight provides investors with a level of confidence and security.
Investing in a spot-bitcoin ETF offers investors the opportunity to profit from bitcoin’s performance without the complexities and risks associated with owning bitcoin directly. Owning bitcoin directly involves storing it in a digital wallet and managing passkeys, encrypted strings of characters required for crypto transactions. However, this method exposes investors to security risks, as digital wallets can be vulnerable to hacking, and the crypto industry lacks federal regulation.
Prior to the recent approval, the SEC had rejected previous attempts to launch publicly traded bitcoin ETFs due to concerns about the potential for manipulation and fraud in the bitcoin market. Despite numerous industry efforts spanning over a decade, securing approval for ETF trading remained elusive until now.