Bitcoin, the world’s most popular cryptocurrency, hit the $69,000 mark briefly Tuesday morning before sliding down in afternoon trading, breaking a record set in November 2021 of about $68,990.
As of mid-afternoon Tuesday, the token was trading around $62,395, according to crypto tracking site CoinGecko.
Bitcoin valuations have been on a rocky road since hitting the previous peak in late 2021, but the digital currency is up over 45% since the start of the year and was selling for about $22,000 per token this time last year.
Experts say the current upward trend in bitcoin pricing is being driven by a January decision by the U.S. Securities and Exchange Commission to allow about a dozen exchange-traded funds, or ETFs, to track the price of bitcoin. The ruling opened the door to a new entry point for investors interested in pushing money into cryptocurrencies via an option that doesn’t require them to actually purchase the digital tokens.
ETFs will track a particular index, sector, commodity or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities, per Investopedia.
A spot bitcoin ETF, which is simply an exchange-traded fund that tracks the price of bitcoin, allows, in this case, bitcoin investing without having to manage a crypto account or crypto wallet.
Cryptocurrencies drawing investors
Bryan Armour, the director of passive strategies research for North America at Morningstar, told NPR that the new bitcoin ETFs had a “rocky performance out of the gate” but have since evolved to “clear skies and smooth sailing” and have helped draw billions of dollars in new investments into crypto tokens.
Cryptocurrencies in general, and bitcoin in specific, have seen consistent high volatility over the past 15 years, experiencing wild valuation swings. But in spite of that dynamic, some market watchers believe digital currencies are continuing to build a more stable base, thanks in part to broadening interest from investors.
“Bitcoin reclaiming its all-time high yet again shows it is never going away,” Alex Thorn, head of research at Galaxy Digital, told CNBC. “In its 15 years of existence, bitcoin has seen four 75% (plus) drawdowns, and each time it has come roaring back.”
Since January when the funds started trading, investors have plowed more than $15 billion into the nine newly launched spot bitcoin ETFs, according to The Wall Street Journal, and just one of those funds from BlackRock is responsible for more than $7 billion of that sum.
“I’ve been surprised by the volume of inflows we’ve seen,” Thorn told The Wall Street Journal. “Wall Street is getting involved. The ETFs are a clear marker.”
What’s next for bitcoin?
But along with the enthusiasm for bitcoin’s new record valuation comes plenty of skepticism about what’s coming next for the cryptocurrency market.
“The market is positioned for a steep correction, possibly between 10% and 20%,” Ed Tolson, CEO and founder of the crypto hedge fund Kbit, told CNBC early Tuesday. “Any material move down will result in cascading liquidations on the crypto perpetual swap markets, where retail has piled into levered long positions, where funding rates are very high.”
“Over the next few quarters, we expect bitcoin to perform well, but with sharp corrections along the way,” Tolson added.