bitcoin hit an all-time high of around $68,800 on Tuesday, capping a notable comeback for the volatile cryptocurrency after its value plummeted in 2022 amid a market crash.
The price of bitcoin has risen more than 300 percent since November 2022, a resurgence that few predicted when the price fell below $20,000 in 2022. Its previous high was just under $68,790 in November 2021 , as crypto markets grew and amateur investors poured their savings into experimental digital currencies. .
“This is just the beginning of this bull market” saying Nathan McCauley, CEO of crypto company Anchorage Digital. “The best is yet to come.”
bitcoin's recent rise has been fueled by investor enthusiasm for a new financial product linked to the digital currency. In January, US regulators authorized a group of cryptocurrency companies and traditional financial firms to offer exchange-traded funds, or ETFs, that track the price of bitcoin. The funds provide a simple way for people to invest in the crypto markets without directly owning the virtual currency.
As of last week, investors had invested more than $7 billion in investment products, fueling bitcoin's rapid rise, according to Bloomberg Intelligence.
The price of Ether, the second most valuable digital currency after bitcoin, has also increased this year. Its rise has been driven in part by excitement at the prospect of regulators also approving an Ether-linked ETF.
Despite the euphoria, the crypto industry is still dealing with the aftermath of the 2022 crisis. Sam Bankman-Fried, the disgraced founder of collapsed crypto exchange FTX, will be sentenced to prison at the end of March. The Securities and Exchange Commission has sued several prominent crypto companies, including US exchange Coinbase, arguing that the companies offer unregistered securities.
Courts have begun to evaluate some of those lawsuits and the outcome could determine whether crypto companies can continue operating in the United States. Many skeptics remain unconvinced that digital currencies offer much real-world utility.
“There is no inherent value,” said John Reed Stark, a former SEC official and outspoken critic of the crypto industry. “There is no proven track record of adoption or trust.”
bitcoin was invented after the 2008 financial crisis by a mysterious developer using the pseudonym Satoshi Nakamoto. The digital currency was originally conceived as a decentralized alternative to the traditional financial system, a way for people to exchange funds without relying on banks or other intermediaries.
But as bitcoin's value increased, it became a vehicle for financial speculation. The price of the currency rose rapidly, before falling just as quickly: minting new millionaires one day and wiping out their savings the next.
In the early part of the pandemic, a surge in day trading by amateur investors helped turn cryptocurrencies into a hot commodity. The industry promoted itself in flashy magazines and Super Bowl commercials, causing the price of bitcoin to skyrocket to a record high.
After a year, the bubble burst. A series of corporate implosions culminated in November 2022 with the collapse of FTX, the Bankman-Fried exchange. Investors lost billions of dollars as the price of bitcoin plummeted to around $16,000.
The industry's fortunes began to improve in August, when a federal appeals court cleared the way for companies to offer bitcoin-linked ETFs. An ETF is essentially a basket of assets divided into stocks. Investors buy shares from the basket, rather than owning the assets directly.
In the world of cryptocurrencies, that means investors can gain exposure to bitcoin without mastering the technical details of a digital currency wallet, or without entrusting large amounts of money to fly-by-night companies with checkered legal records. Financial giants like BlackRock and Fidelity are offering bitcoin investment products, providing some stability to a volatile industry.
For years, cryptocurrency advocates predicted that the approval of bitcoin ETFs would bring billions of dollars in new investment to the industry, although some analysts expressed skepticism about those projections.
Early data suggests the impact has been significant. In recent months, the approval of investment vehicles has combined with other factors to drive up the price of bitcoin.
Later this year, the number of new bitcoin entering circulation will decrease due to an event known as “bitcoin-halving-and-does-it-push-up-the-cryptocurrency-s-price?sref=zVYYYI5e” title=”” rel=”noopener noreferrer” target=”_blank”>halving.” The event, which was programmed into bitcoin's underlying code, will halve the amount of bitcoin people receive when they run software to validate crypto transactions (a process commonly known as “mining”).
The prospect of tighter supply of bitcoin has helped lift its price, some analysts have argued.
