Investor enthusiasm has surged following the late January approval of 11 spot bitcoin ETFs by the Securities and Exchange Commission.
Bitcoin reached a new peak on Tuesday, driven by investors pouring funds into U.S. spot exchange-traded crypto products and the possibility of a global decrease in interest rates.
The largest cryptocurrency in the world hit $69,202, surpassing the previous all-time high of $68,999.99 in November 2021. Investor interest has been on the rise since the approval of 11 spot bitcoin ETFs by the Securities and Exchange Commission in late January.
Bitcoin’s impressive surge of nearly 160% since October, with 44% of that increase occurring in February alone, stands in stark contrast to the challenging year of 2022. During that time, the market endured an 18-month crypto winter marked by notable corporate bankruptcies and scandals.
Apart from the growing interest from a broader range of investors, bitcoin and the broader crypto market have benefited from the potential of the Federal Reserve reducing U.S. interest rates. This often leads investors to shift their capital towards assets that offer higher yields or greater volatility.
Throughout this year, investors have shown strong interest in cryptocurrencies, mega-cap technology stocks, and investment-grade corporate bonds.
Bitcoin has also seen a positive impact leading up to the upcoming halving event in April, a process that occurs every four years and involves reducing the rate at which tokens are released and the rewards given to miners.
The total supply of bitcoin is capped at 21 million, with 19 million already in circulation.
Despite its recent surge in popularity, many investors view bitcoin as too volatile and lacking practical real-world uses beyond being a speculative asset.
In addition to the influx of money into ETFs, the limited supply of bitcoin, and the potential decrease in U.S. interest rates, some companies are diversifying their portfolios by investing in cryptocurrencies.
For instance, MicroStrategy, a software company that has held bitcoin for a long time, recently purchased around 3,000 bitcoins for $155 million. Similarly, Reddit disclosed in a regulatory filing that it acquired small amounts of bitcoin and ether.