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The price of bitcoin hit an all-time high of about $68,800 Tuesday, surpassing the previous record reached in November 2021.
The cryptocurrency has gained approximately 50% in 2024, and has recovered more than 300% since hitting a post-pandemic low of about $16,500 in December 2022.
The latest rally is being fueled by hopes that the launch of bitcoin exchange-traded funds, or ETFs, will expand the pool of bitcoin buyers.
The Securities and Exchange Commission approved ETFs in January to make it easier for investors to gain exposure to the price movements of bitcoin as part of diversified portfolios without having to go through the sometimes-onerous process of owning the digital coins themselves.
The ETFs have collectively already attracted billions of dollars of investments.
The cryptocurrency world is also banking on a price rally coming after a technical event known as ‘halving’ occurs in April. That causes the rate of supply of new bitcoin to decline. So if demand remains unchanged or even grows, the price goes up.
Bitcoin remains highly controversial, and many mainstream investment experts and market regulators urge caution about investing in it. For instance, SEC Chair Gary Gensler said the agency’s ETF approvals were not an endorsement of bitcoin, calling it a “speculative, volatile asset.”
And in a blog post in January, executives at the financial giant Vanguard echoed that view, saying cryptocurrencies like bitcoin are ‘more of a speculation than an investment,’ which is why the company does not offer crypto products.
‘With equities, you own a share of a company that produces goods or services, and many also pay dividends,’ Vanguard said. ‘With bonds, you get a stream of interest payments. Commodities are real assets that meet consumption needs, have inflation-hedging properties, and can play a role in certain portfolios.’
‘While crypto has been classified as a commodity, it’s an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio.’
