Monday, March 4, 2024, saw Bitcoin soar to its highest price ever, ending a more than two-year period of stagnation that had many questioning the viability of the entire cryptocurrency industry. The trailblazing digital currency surpassed its previous high of $68,789 on Nov. 10, 2021, with a remarkable $68,791 in trading.
In recent months, the surge in Bitcoin’s value has been significantly boosted by the approval of Bitcoin spot ETFs by the U.S. Securities and Exchange Commission (SEC). This provided a gateway for traditional investors to add Bitcoin to their investment portfolios. The road to approval was lengthy, marked by persistent lobbying efforts from crypto companies. Ultimately, the SEC reluctantly approved, following a court ruling that criticized the regulator’s arbitrary rejection of the ETF applications.
In January, the first batch of 11 Bitcoin spot ETFs, which mirror the current market price of the digital currency, was launched. In less than a month, the ETFs attracted more than $4.2 billion in net inflows.
ETFs are investment vehicles that mimic the trading of stocks while tracking a variety of assets. One of the main attractions of an ETF is that it allows investors to gain access to Bitcoin through their conventional brokerage firms, eliminating the need to establish a digital wallet via a crypto exchange.
Bitcoin serves as a barometer for the wider $2 trillion cryptocurrency market, which has faced significant challenges in recent times, including major lender and exchange bankruptcies, volatile price changes and the legal prosecution of people such as former cryptocurrency heavyweight Sam Bankman-Fried. He was found guilty in November of embezzling billions from clients of his FTX crypto exchange before it crashed in 2022.
As per CoinMarketCap data, the value of Bitcoin has increased by more than 200% in the last year, accounting for more than one-half of the whole cryptocurrency market. In addition, the digital currency has hit all-time highs when compared to some major and developing-market currencies, such as those from the United Kingdom, China and Japan.
The recent rally in Bitcoin’s value has also been contributed to by the anticipated Bitcoin halving event. Approximately every four years, the number of new Bitcoins introduced into circulation is halved, marking a fundamental aspect of the crypto’s design. It is anticipated that the value of Bitcoin will increase as its supply declines.
Miners, traders and investors are currently hoarding Bitcoin, intending to sell it at the expected peak after the halving event. This behavior sets the stage for the anticipated price decline immediately after the halving event.
Mining companies such as Bit Digital Inc. (NASDAQ: BTBT) are also holding out to see how the halving could potentially affect their earnings going forward.
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