2024-03-06 18:00:00
Funds flock to allow US spot ETFs, expected to cut interest rates – ‘Next month’s halving also plays a role’ Expert says, “Be cautious when investing due to large fluctuations”
Bitcoin surpassed $69,000 during intraday trading on the 5th, hitting an all-time high. The previous record of $68,990 in November 2021 was broken in two years and four months.
Bitcoin once fell to the $16,000 range as the Federal Reserve, the U.S. central bank, began raising interest rates in early 2022, and the bankruptcy of virtual currency exchange FTX in November of the same year. However, it has since soared by more than 300%. Corey Kripsten, CEO of Swan, a virtual currency trading app, told the New York Times, “There have been 150 declarations that ‘virtual currency is dead,’ but Bitcoin has survived.”
The main reason why Bitcoin jumped 300% in just over a year and a half is that the U.S. financial authorities allowed spot exchange-traded funds (ETFs). The U.S. Securities and Exchange Commission (SEC) approved 11 spot ETFs applied by BlackRock, the world’s largest asset management company, in January this year. According to Bloomberg Intelligence, the total assets of ETFs on the market are close to $50 billion (regarding 66.8 trillion won). Also, on this day, approximately $10 billion (approximately 13.4 trillion won) worth of Bitcoin transactions were made through ETFs.
According to Galaxy Digital, a virtual currency asset management company, as of the 1st, regarding 4% of the world’s Bitcoin circulation is tied up in the new ETF. The Wall Street Journal (WSJ) said, “Morgan Stanley is also conducting due diligence on the Bitcoin spot ETF. “We are considering whether to put it on our platform.”
Another background for Bitcoin’s rise is optimism that virtual currencies will also enter an upward trend as major financial assets such as stocks and bonds have recently risen one following another due to expectations of an interest rate cut by the Federal Reserve and the artificial intelligence (AI) craze.
Also, it cannot be left out that Bitcoin’s ‘halving’, which occurs every four years, is expected to occur at the end of next month. Bitcoin is designed so that mining volume is halved at certain times. A decrease in supply creates conditions for the price of existing Bitcoin to rise.
However, the warnings from virtual currency skeptics are also significant. They take issue with the fact that the volatility is quite large. On the 5th, the fluctuation was so large that it plummeted by more than 14% immediately following hitting $69,000, prompting calls for investment caution.
New York = Correspondent Kim Hyun-soo [email protected]
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