Following the approval of an investment vehicle backed by cryptocurrencies by a UK financial regulator, Bitcoin surged to a record high of over $72,000 on Monday.
Monday’s early trade saw Bitcoin reach $72,166, just a few days after it eclipsed the previous peak of around $69,000 from November 2021. The price of bitcoin fell by 10% after surpassing that barrier last week before rising to its present levels.
The U.K. body in charge of overseeing financial matters, the Financial Conduct Authority, declared that it will “not object” if exchanges establish a market segment for exchange-traded notes, or cETNs, backed by cryptocurrency assets that is listed in the U.K.
The financial instruments that will soon be accessible enable traders to purchase and sell assets whose prices change in tandem with a certain cryptocurrency. Traders can effectively invest in cryptocurrencies through publicly listed assets, eliminating the hassle and technical difficulty of actually obtaining a cryptocurrency.
The Financial Conduct Authority warned traders about the risks involved with investing in cryptocurrencies even though it approved cETNs. The authority also stated that the products will not be offered to retail investors.
People are still being reminded by the FCA that cryptoassets are extremely risky and mostly unregulated. The agency said in a statement that investors should be ready to lose whatever they invested.
The action comes after the U.S. Securities and Exchange Commission authorized Bitcoin Exchange-Traded Funds, or Bitcoin ETFs, in January. Similarly, investors can invest in an asset that follows the price movement of Bitcoin through a Bitcoin ETF without having to put money into the cryptocurrency itself.
The price of bitcoin skyrocketed following the SEC’s approval of Bitcoin ETFs, driven up by a wave of new investment. Numerous bitcoin exchange-traded funds (ETFs) became accessible shortly after the SEC approved the new investment option. These included products from established companies like Franklin Templeton and Fidelity.
According to Bryan Armour, the director of passive strategies research at financial firm Morningstar, the new cryptocurrency alternatives unleashed billions of dollars in investment within weeks, as he previously told. Over the first seven weeks, the top nine bitcoin ETFs received a total of $10 billion, according to Armour.
The price of bitcoin has increased by 54% since the approval of bitcoin ETFs on January 10.Bitcoin has a history of substantial price fluctuation, notwithstanding the current advances that have occurred at a fast pace.
For example, the price of bitcoin fell by 15% right after the approval of the bitcoin ETF before rising again. According to Armour’s prior statement, bitcoin has experienced four separate price declines of more than 40% in the last five years.
An exchange-traded fund (ETF) is essentially a collection of securities that allows investors to wager on the appreciation of an underlying asset without actually acquiring the asset.
Rather than purchasing, transporting, and storing the physical item, people and organizations can invest in the price movement of precious metals using exchange-traded funds (ETFs) for gold.
Conversely, a Bitcoin ETF allows investors to participate in the cryptocurrency market without having to deal with the costs and technical difficulties of using a cryptocurrency exchange.
