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Bitcoin soars to record levels following the UK’s approval of the cryptocurrency
Bitcoin skyrocketed to a record high of more than $72,000 on Monday after a financial regulator in United Kingdom has given the green light to a cryptocurrency-backed investment vehicle.
Bitcoin hit $72,166 in early trading on Monday, just days after surpassing the previous high of nearly $69,000 from November 2021.
After crossing that threshold last week, bitcoin’s price fell 10% before rebounding to current levels.
The Financial Conduct Authority, the British agency responsible for regulating financial activity, She said will “not object” to exchanges forming a UK-listed market segment for Crypto Asset-Backed Exchange Traded Notes, or cETNs.
Bitcoin has risen over the past two months
ABC News, Yahoo Finance
The financial instruments that will soon be available will allow traders to buy and sell assets whose price fluctuates depending on a specific cryptocurrency.
Exchange-traded assets allow traders to essentially invest in cryptocurrency, but without the inconvenience and technical challenge of acquiring a cryptocurrency itself.
Despite the approval of cETNs, the Financial Conduct Authority said the products will not be available to retail investors and warned traders about the risks associated with investing in cryptocurrencies.
“The FCA continues to remind people that cryptoassets are high risk and largely unregulated. Those who invest should be prepared to lose all their money,” the agency She said in a statement.
The move follows a similar one decision by the U.S. Securities and Exchange Commission in January, when the agency approved Bitcoin Exchange-Traded Funds, or Bitcoin ETFs.
Similarly, a Bitcoin ETF allows investors to purchase an asset that tracks the price movement of Bitcoin without placing funds directly into the cryptocurrency.
Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), at SEC headquarters in Washington, DC, on January 9, 2024.
TJ Kirkpatrick/Bloomberg via Getty Images, FILE
After the SEC approved Bitcoin ETFs, the price of bitcoin surged higher, drawing fuel from an influx of new investments.
Soon after the SEC approved the new investment option, a number of bitcoin ETFs became available, including offerings from legacy firms like Fidelity and Franklin Templeton.
New crypto alternatives have freed up billions of dollars in investments in just weeks, Bryan Armour, director of passive strategies research at financial firm Morningstar, mentioned previously ABC News. The nine major bitcoin ETFs received a combined $10 billion in the first seven weeks, Armor said.
Since bitcoin ETFs gained approval on January 10, the price of bitcoin has increased by 54%.
Despite the breakneck pace of gains in recent weeks, bitcoin has a record of significant price volatility.
In the period immediately following the approval of the Bitcoin ETF, for example, the price of Bitcoin fell 15% before rebounding. Over the past five years, bitcoin has fallen more than 40% on four separate occasions, Armor previously told ABC News.
An ETF is a collection of securities that offers investors the opportunity to bet that an underlying asset will increase in price without purchasing it.
For example, a gold ETF allows individuals and institutions to bet on the price movement of the precious metal rather than purchasing, transporting and storing the physical object.
A Bitcoin ETF, in turn, offers investors access to the cryptocurrency market without dealing with the technical hurdles and fees associated with navigating a cryptocurrency exchange.