Bitcoin's price has soared to an all-time high, continuing the impressive rally that began in late 2023.
Early Tuesday, the digital currency surpassed $68,818, a dramatic increase from its valuation of $44,000 at the start of the year. This surge has similarly propelled the prices of other popular cryptocurrencies like Ether and Solana.
Cryptocurrency experts attribute bitcoin's rise to surging demand for spot bitcoin exchange-traded funds (ETFs). These ETFs offer a less volatile way for investors to participate in the cryptocurrency market and have seen massive cash inflows throughout the year.
"Investors are getting turned on to the fact that bitcoin can be treated as an uncorrelated asset, which makes it extremely attractive for portfolio diversification," stated Joel Kruger, a market strategist at LMAX Group, a digital currency exchange.
Spot bitcoin ETFs enable investors to gain exposure to bitcoin itself, rather than bitcoin futures contracts (which regular bitcoin ETFs use as an underlying asset). Shares of these ETFs, managed by firms holding bitcoin, are listed on traditional stock exchanges.
Since the Securities and Exchange Commission (SEC) approved spot bitcoin ETF sales in January, investors have poured roughly $7.35 billion into the available funds (Bloomberg). Industry giants like BlackRock and Fidelity Investments now offer these ETFs.
Bitcoin's upswing started months earlier in 2023, reaching a 19-month high of $41,000 in December. Analysts at the time cited factors like anticipated SEC approval of spot ETFs, predictions of Fed rate cuts in 2024, and the approaching bitcoin halving event (where mining rewards are halved).
Of course, this price surge doesn't guarantee stability. As Laila Maidan, an investing correspondent, previously told CBS News, "It doesn't mean the crypto is going to skyrocket and stay high. It's still volatile, and there's a lot of people who will always trade it."
Nonetheless, bitcoin's resurgence brings relief to crypto investors after a turbulent 2022 marred by the collapse of FTX and other exchanges. As the dominant cryptocurrency, bitcoin's performance is often seen as an indicator of the broader crypto market's health.