Why cryptocurrency is going up
Why cryptocurrency is going up

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Bitcoin surged to a record high on Tuesday, the latest spike in the world’s biggest digital currency’s roller-coaster ride.

The price briefly crossed $69,000, surpassing its previous all-time high of $68,990.90 from November 10, 2021, according to a Wall Street Journal report that cited data from CoinDesk’s Bitcoin Price Index.

The price of bitcoin has risen dramatically over the past year, fueled by regulatory approval for exchange-traded funds in the digital currency.

For years, ordinary investors who wanted to trade digital currencies usually had to go to crypto exchanges, a potential problem for people unfamiliar with Bitcoin.

That changed in January when federal regulators voted that ordinary American investors could buy and sell spot bitcoin ETFs the same way they trade stocks.

This move opened up bitcoin investing to a larger portion of the American public, including potential investors who never understood what bitcoin was or how it worked, let alone how to buy and sell it. Trading began in earnest.

A vote by the U.S. Securities and Exchange Commission allowed exchange-traded funds, or ETFs, to be sold to the public.

Tuesday’s record price “marks a turning point for crypto,” said Nathan McCauley, CEO and co-founder of crypto platform Anchorage Digital. “We are now seeing exactly what happens when the market has safe, secure and compliant access to an asset class – and institutions are just getting started.”

SEC Approves Bitcoin ETF, Clearing Path for Public Trading

ETFs, for the uninitiated, are an investment vehicle similar to a mutual fund. They are traded on exchanges and usually track a specific index or “basket” of stocks, bonds or commodities. They function like stocks, with prices that change throughout the trading day, while mutual funds trade once a day at one price.

Anticipation of the SEC vote boosted the price of bitcoin, which is notoriously volatile. The currency traded at $17,000 early last year.

The new ETFs are listed on Nasdaq, the New York Stock Exchange and the Chicago Board Options Exchange, all highly regulated exchanges, according to Reuters.

Investing in a spot bitcoin ETF allows investors to reap potential gains from bitcoin without the attendant risks of owning bitcoin directly, investment experts said.

Owning Bitcoin directly means storing it in a digital “wallet”. Using the wallet means maintaining passwords, encrypted strings of letters and numbers that enable crypto transfers, according to Investopedia. Wallets can be attractive targets for hackers, and the system lacks federal regulation.

The federal securities agency has rejected previous offerings of publicly traded bitcoin ETFs over concerns that bitcoin is susceptible to manipulation and fraud. The industry has been looking into ETF trading for over a decade.

Bitcoin ETF: Here are the best options this year

Bitcoin ETFs permitted to trade include Fidelity, BlackRock

The applications approved this year came from 11 issuers, including big name investment firms such as BlackRock and Fidelity.

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Two of the SEC’s five commissioners voted against the decision. One of them, Democrat Caroline Crenshaw, called the vote “incorrect and ahistorical” in a statement.

Daniel de Wiese covers personal finance for USA Today.

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