Thu | Dec 9, 2021

Bitcoin price hits new record on mainstreaming excitement

Published:Thursday | October 21, 2021 | 12:06 AM
This May 12, 2021 photo shows an advertisement for the cryptocurrency bitcoin displayed on a tram in Hong Kong.
This May 12, 2021 photo shows an advertisement for the cryptocurrency bitcoin displayed on a tram in Hong Kong.

Bitcoin jumped to a record on Wednesday, topping US$66,000 for the first time, as it rides a wave of excitement about getting further accepted by the financial establishment.

Bitcoin was trading at US$66,901.30, up 7.6 per cent, as of 10:52 a.m. Eastern time. It’s roared back after sinking below US$30,000 during the summer to top its prior record set in April. That previous all-time high was nearly US$64,889, according to CoinDesk.

A day earlier, the first exchange-traded fund linked to bitcoin attracted huge interest from investors, giving another boost to the surging field of cryptocurrencies. Shares of the ProShares BitCoin Strategy ETF changed hands 24.1 million times in a resounding début. It was off to another strong start on Wednesday, with volume topping nine million within the first hour of trading.

INVESTORS

The ETF doesn’t invest directly in bitcoin. It instead invests in the futures market tied to bitcoin, but the industry sees the ETF bringing in a new class of investors to bitcoin. Someone with an old-school brokerage account can buy the ETF, for example, without having to learn what a hot or cold wallet is.

Investors are getting more interested in crypto because they’re always looking for assets whose prices moves independently of everything else in their portfolios. One school of thought says bitcoin in particular can offer investors protection from high inflation, and some fans see it as akin to ‘digital gold’, though it doesn’t have a long track record to back that up.

More high-minded fans say digital assets are simply the future of finance, allowing transactions to sidestep middlemen and fees with a currency that’s not beholden to any government.

Crypto still hasn’t won over everyone, though. Critics say they’re still not widely used as forms of payment. They also criticise how much energy is used by the crypto system, which adds to climate-changing emissions. The biggest threat, meanwhile, is all the regulatory scrutiny shining on it.

China last month declared bitcoin transactions illegal, for example. United States regulators haven’t gone that far, but the chair of the US Securities and Exchange Commission has said the world of crypto doesn’t have enough protections for investors.

Cryptocurrencies are also notorious for their sharp swings in price. The last time bitcoin set a record high, the price subsequently dropped by half in roughly three months.

AP