Bitcoin on Tuesday briefly traded at above $69,000, breaking the all-time record set by the cryptocurrency in 2021.
Bitcoin was up 3% over the past 24 hours, 59% over the past month, and a whopping 202% over the past year.
The milestone is a big boost for the crypto industry, which has rebounded from the lows it plumbed during the FTX scandal in late 2022, when bitcoin was only trading at about $16,000. The current rise equates to returns of about 340% for investors who bought the dip back in 2022.
The rally builds upon what was a very solid 2023 for investors in the digital asset space. Last year, bitcoin rose by about 150%, starting 2023 at just over $16,000 and ending the year around $40,000.
The current rally of the flagship cryptocurrency pulled up other digital assets as well. Ethereum, the second largest cryptocurrency by market cap, was up nearly 7% to $3,800 on Tuesday. Meanwhile, Ripple rose 14.6% over the past week to $0.65 and Cardano was up 24% to $0.77. Meme crypto Dogecoin vaulted a whopping 92% in the past week alone.
There is much speculation as to what is causing crypto’s record rise this year, although it is likely a combination of factors.
Muneeb Ali, CEO and co-founder of Trust Machines, a company building bitcoin apps, pointed out that bitcoin’s market cap eclipsed $1 trillion for the first time since 2021 and said that the cryptocurrency “the only digital asset that has proved itself as a hedge or store of value.”
The Securities and Exchange Commission’s landmark decision to allow bitcoin spot ETFs came in January after years of waiting for cryptocurrency advocates and hope from large institutions such as BlackRock and Fidelity that their applications would get approved.
“Add onto all that building the inflows from Bitcoin ETFs, with firms buying 11x more than is being mined each day,” Ali said in a note. “That’s within only two months of being publicly traded ETFs. Bitcoin season 2 has only just begun.”
There is also a surge of optimism surrounding this year’s “halving.” The bitcoin halving is an event that will take place in a couple months and could prove to be yet another boost for the digital asset.
To mine for bitcoin, high-powered computers are used to verify virtual coin transactions. Bitcoin operates on what is known as a blockchain, essentially a public ledger, which contains the history of every transaction. The miners’ computers solve complicated math problems in order to add new blocks to the chain and are, in turn, rewarded with the digital token, making the endeavor profitable.
About every four years, the rewards for bitcoin miners get cut in half, reducing the supply of new bitcoins by 50%. That makes the product a scarcer commodity and tends to raise the price in the following months, often sparking a bull market for investors.
Bitcoin has proved resilient despite the predictions of many on Wall Street. The FTX scandal back in 2022, which ended in the imprisonment of FTX founder Sam Bankman-Fried and the company’s dramatic collapse, dealt a heavy blow to the crypto space.
Still, despite the setback, crypto traders remained confident that digital assets would once again rebound and notch new highs, although those predictions took some 16 months to come to fruition.
Wall Street and investors are increasingly taking the space more seriously.
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Sheila Warren, CEO of the Crypto Council for Innovation, said in the lead-up to bitcoin’s new record that the momentum “not only breaches the psychological barrier around this particular asset, but also indicates that this is about the broader acceptance and integration of digital assets into the traditional financial system.”
“The ‘normalization’ we are seeing signifies another turning point, highlighting the potential of an innovative technology to reshape the financial landscape,” she added.