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Bitcoin Has Surpassed $41,000 For The First Time Since April 2022. What’s Behind The Price Surge?

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NEW YORK – Bitcoin is experiencing a renaissance. On Monday, the world’s largest cryptocurrency surpassed $41,000 for the first time in over a year and a half, marking a 150% increase this year.

According to FactSet, volatile bitcoin soared from just over $5,000 at the start of the epidemic to roughly $68,000 in November 2021, a period highlighted by a rise in demand for technology products. Prices dropped back to earth after an aggressive sequence of Federal Reserve rate hikes aimed at curbing inflation, followed by the collapse of FTX, one of the largest crypto businesses.

When 2023 began, a single bitcoin was worth less than $17,000, losing more than 75% of its value. However, once inflation began to fall, investors returned in huge numbers. Furthermore, the failure of large tech-focused banks prompted additional investors to resort to cryptocurrency as they exited holdings in Silicon Valley start-ups and other hazardous bets.

However, anticipation for the legalization of spot bitcoin exchange-traded funds – a pooled investment product that can be bought and sold like stocks — is propelling this recent rally.

bitcoin

Bitcoin Has Surpassed $41,000 For The First Time Since April 2022. What’s Behind The Price Surge?

According to industry supporters, this new manner of investing in bitcoin at spot prices rather than futures pricing could make it easy for anyone to enter the crypto verse while minimizing some of the well-documented hazards of cryptocurrency investing. Previously, regulators rejected bitcoin spot ETF applications, but recent victories for some crypto fund managers have increased the likelihood of a first approval as soon as next month.

“The longer-term catalyst (for bitcoin) is a lot of optimism related to the potential approval of a spot ETF,” said Riyad Carey, a Kaiko research analyst, on Monday. However, he pointed out that a regulatory green light does not guarantee sustained gains.

bitcoin

Bitcoin Has Surpassed $41,000 For The First Time Since April 2022. What’s Behind The Price Surge?

While analysts anticipate that the probable introduction of spot bitcoin ETFs will generate a much wider pool of crypto investors, Carey added that future volumes might go either way. This might either increase or decrease the value of Bitcoin.

Bitcoin’s recent rise comes at an extremely disruptive time for cryptocurrencies. Last month, the United States authorities fined Binance, the world’s largest crypto exchange, $4 billion after its founder, Changpeng Zhao, pleaded guilty to a felony charge.

However, according to Carey, Binance continues to operate and maintain its market share. In some respects, the company’s settlement “propelled the market forward more by removing one of the… more ominous overhangs that was a sort of big question mark,” he added, pointing to bitcoin’s advances two weeks after the announcement.

Despite Bitcoin’s recent euphoria, experts warn that it is a dangerous trade with highly unpredictable price movements. Investors might lose money as fast as they make it.

The bankruptcy of crypto exchange behemoth FTX last year also “left a big scar” on the public’s confidence in the crypto business and crushed ordinary investors, according to the report. According to Edward Moya, a former senior market analyst at Oanda, institutional money, such as hedge funds, drives most of the current crypto investment.

bitcoin

Bitcoin Has Surpassed $41,000 For The First Time Since April 2022. What’s Behind The Price Surge?

Carey also stated that liquidity in cryptocurrency markets has yet to restore to pre-FTX levels, and that lesser liquidity can exacerbate price volatility.

“In the past few months, that has normally been the price moving up — but people should always be aware it can go in the reverse and quickly,” he said.

The price was $41,709 as of 1:30 p.m. Eastern time Monday.

Other crypto players’ equities have risen in recent months at different rates or to the same heights as Bitcoin. For example, Ethereum was trading at $2,223 on Monday afternoon, up 85% from the beginning of 2023. Meanwhile, Binance Coin and Dash are down about 5.25% and 24.37% for the year, with Monday afternoon values of around $231 and $32, respectively.

SOURCE – (AP)

Cryptocurrency

A Guide to Spotting Bitcoin ETFs for Everyday Investors and Retires in 2024

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A Guide to Spotting Bitcoin ETFs for Everyday Investors and Retirees

(VORNews) – Shortly before the US Securities and Exchange Commission authorized spot bitcoin exchange-traded funds (Bitcoin ETFs) on Wednesday night, it reiterated its “no FOMO” caution to investors.

The caution not to invest for “fear of missing out” stressed the volatility of digital assets, pointing out how popular cryptocurrency investments experience tremendous highs and lows, resulting in billions of dollars in profits and losses.

Gary Gensler, head of the SEC, stated following Wednesday’s announcement in which the commission approved the bitcoin ETF listing but stated that “we did not approve or endorse bitcoin.” Digital asset investment is now regulated and standardized thanks to the SEC’s approval.

However, mainstream investors should proceed with caution, according to financial analysts, because bitcoin (BTC-USD) is still seen as a speculative asset. “You have to be very careful,” said Kiran Garimella, an assistant professor at the University of South Florida Muma College of Business, speaking to Yahoo Finance from a very conservative financial standpoint. “If the financial instrument that’s being traded doesn’t actually represent anything of specific value underlying it, then you’d have to sit back and question that.”

First, what exactly is a spot Bitcoin ETF?

ETFs that track the performance of bitcoin are known as spot Bitcoin ETFs. Asset managers who hold the actual bitcoin and its current value (“spot”) as the underlying asset manage the fund, in which investors buy shares. Management fees and the thin margin between the price at which they sell the shares and the actual price of bitcoins (which fluctuates) are how these managers make money.

Although the value of ETFs will fluctuate in tandem with Bitcoin, the funds themselves may be more stable because fund administrators can employ a variety of financial instruments to mitigate the fund’s volatility.

“Investing in an ETF not only simplifies the process of purchasing, selling, and trading bitcoins, but it may also mitigate a portion of the associated strategic risk,” Garimella explained. Unknown but utilizing the alias Satoshi Nakamoto, an unidentified individual created the initial Bitcoin in 2008.

It was established on the decentralized, free market tenet that digital currencies be generated, distributed, traded, and recorded in the blockchain, a peer-to-peer ledger. In the past week, Bitcoin’s price fluctuated around $46,500; at one point last week, it surged to $49,000 due to the reactions to the SEC approval.

In 2021, when the price surpassed $65,000, the value of a coin reached its historic apex. A mere twelve months later, however, it plummeted to approximately $16,000 as investors gradually lost faith in the industry.

Do you need to include bitcoin ETFs in your portfolio?

Everyone may now possess Bitcoin in their investing or retirement accounts, according to the much-anticipated SEC clearance. No longer do investors need to purchase digital tokens directly from a crypto exchange.

Even though many Americans still don’t understand or have access to cryptocurrency, eleven new spot funds have been launched on the NYSE, CBOE, and Nasdaq, the same exchanges where equities, mutual funds, and other conventional assets are traded.

According to Garimella, the new funds significantly lessen the administrative risks associated with Bitcoin investments. Previously, interested parties needed to generate “private keys” and create a “wallet” to own the tokens. There was a chance of fraud or hacking on crypto exchanges.

“Oh, boy, you’d have to go through hoops just to acquire a fraction of Bitcoin or any other cryptocurrency for that matter,” said Garimella. “Most people had no clue what a wallet or private key is.” There is still a strategic risk in investing in a Bitcoin fund, even though the funds themselves are standardized.

“If you can manage to invest $5, sell it for $500, and then make a lot of money, it would be fantastic,” Garimella added. But can you be reliable and organized, and can you develop a plan to make the most of the value that results from that? Cryptocurrency and its speculative character continue to inspire widespread mistrust.

Such instruments rely only on investors’ expectations that the price of the digital asset will rise, rather than any inherent value in the asset itself. According to Mark Higgins, CFA, author of “Investing in US Financial History,” “Cryptocurrency seems like speculation that central banking will be replaced—that maybe the US dollar is going to be replaced as the dominant reserve currency,” as reported by Yahoo Finance. “I am skeptical.”

Neither the creation of a spot bitcoin ETF nor the offering of any crypto-related products are in the cards for the second-largest ETF provider, The Vanguard Group. “Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio,” according to the firm.

Meanwhile, on Thursday, Fidelity Investment, a global leader in asset management, introduced the Fidelity Wise Origin Bitcoin Fund (FBTC), describing it as an effective tool for investors looking to get exposure to Bitcoin. “We’ve long felt a spot-priced exchange-traded vehicle would be an effective method for investors to obtain exposure to bitcoin,” stated Cynthia Lo Bessette, head of digital asset management at Fidelity.

However, investors are being asked to undertake Fidelity’s Designated Investment Agreement (DIA) when they purchase the FBTC fund, which shows how unexplored this area is. The digital product investors have been verified by the DIA to be experienced, risk-tolerant, and financially stable enough to bear the possibility of partial or whole loss of investment.

Everyone may now possess Bitcoin in their investing or retirement accounts according to the much-anticipated SEC clearance. No longer do investors want to purchase digital tokens directly from a crypto exchange. However, asset managers may mitigate the funds’ risk through complex strategies including strengthening laddering, adding call options, launching futures contracts, and hedging, thus these ETFs may be a safer method to buy bitcoins.

“When you have an ETF that does all of that stuff, it introduces a certain level of stability or risk management to that underlying instrument,” explained Garimella. “In a crypto market, you’re exposing yourself to a certain level of risk, which could be minimized with the right ETF.”

Perhaps the greatest allure of blockchains is their possible future use cases, which is why Bitcoin is the most well-known cryptocurrency in the world. Supporters of the technology think it has the potential to revolutionize the way money is exchanged. According to Garimella, who holds bitcoin for educational purposes, he is considering increasing his investment in an exchange-traded fund (ETF) shortly due to the innovations in the field that might allow the digital coin to be linked to a physical asset class.

“However, would I suggest it to my grandma as an investment?” “I highly doubt it,” Garimella remarked.

Even though many Americans still don’t understand or have access to cryptocurrency, eleven new spot funds have been launched on the NYSE, CBOE, and Nasdaq, the same exchanges where equities, mutual funds, and other conventional assets are traded.

According to Garimella, the new funds significantly lessen the administrative risks associated with bitcoin investments. Previously, interested parties needed to generate “private keys” and create a “wallet” in order to own the tokens. There was a chance of fraud or hacking on crypto exchanges.

“Oh, boy, you’d have to go through hoops just to acquire a fraction of a bitcoin or any other cryptocurrency for that matter,” said Garimella. “Most people had no clue what a wallet or private key is.”

There is still a strategic risk in investing in a Bitcoin fund, even though the funds themselves are standardized.

“If you can manage to invest $5, sell it for $500, and then make a lot of money, it would be fantastic,” Garimella added. “But can you be consistent and systematic, and can you come up with a strategy to capitalize on the value generated by that?”

Cryptocurrency and its speculative character continue to inspire widespread mistrust. Such instruments rely only on investors’ expectations that the price of the digital asset will rise, rather than any inherent value in the asset itself.

According to Mark Higgins, CFA, CFP, author of “Investing in US Financial History,” “Cryptocurrency seems like speculation that central banking will be replaced — that maybe the US dollar is going to be replaced as the dominant reserve currency,” as reported by Yahoo Finance. “I am skeptical.”

Neither the creation of a spot bitcoin ETF nor the offering of any crypto-related products are in the cards for the second-largest ETF provider, The Vanguard Group.

“Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio,” according to the firm.

Meanwhile, on Thursday, Fidelity Investment, a global leader in asset management, introduced the Fidelity Wise Origin Bitcoin Fund (FBTC), describing it as an effective tool for investors looking to get exposure to Bitcoin.

“We’ve long felt a spot-priced exchange-traded vehicle would be an effective method for investors to obtain exposure to bitcoin,” stated Cynthia Lo Bessette, head of digital asset management at Fidelity.

However, investors are being asked to undertake Fidelity’s Designated Investment Agreement (DIA) when they purchase the FBTC fund, which shows how unexplored this area is.

The digital product investors have been verified by the DIA to be experienced, risk-tolerant, and financially stable enough to bear the possibility of partial or whole loss of investment.

Where to purchase ETFs and what fees to expect

Through their brokerage accounts, investors can purchase shares of bitcoin ETFs to diversify their portfolios. Traders can trade the funds throughout the day for liquidity, similar to other funds. ETFs approved by the SEC are funds from big financial players such as Fidelity, Invesco, and BlackRock.

The costs for managing the ETFs have been announced by many providers. The largest asset manager in the world, Blackrock (BLK), which oversees roughly $10 trillion in assets, has reduced its fee from 0.30% to 0.25%.

The new market is quite competitive, with Grayscale charging 1.5% and Franklin announcing that it will eliminate management costs until August. As of today, January 11, 2019, bitcoin’s market value of $913 billion makes it the biggest cryptocurrency in the world.

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Bitcoin ETFs Approved for the First time by the SEC, Boosting Crypto Advocates

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Bitcoin ETFs Approved for the First time by the SEC, Boosting Crypto Advocates

(Z.News) – Cryptocurrency aficionados are predicting that the approval of the first spot bitcoin exchange-traded funds by the US Securities and Exchange Commission will attract more institutional and individual investors.

Sponsors of the eleven exchange-traded funds (ETFs) that were approved for listing by the leading US securities regulator included both well-established companies like Fidelity and Invesco and up-and-coming digital firms like Grayscale and Ark Invest.

To promote its iShares Bitcoin Trust, BlackRock will ring the opening bell at Nasdaq on Thursday morning, marking the beginning of trading for the first funds. These funds trade on exchanges like stocks and have unique tax protection in the US.

After months of waiting and a contentious legal fight, the approval has finally arrived. As a cherry on top of an already eventful day, hackers momentarily took over the SEC’s X social media account and fraudulently claimed that the applications had already been granted, causing Bitcoin’s price to fluctuate wildly.

Thursday morning saw Bitcoin trading 3% higher at around $47,000, which is still significantly lower than its $69,000 peak in November 2021 but over three times higher than its $16,000 low in December 2022 following the now-infamous crypto exchange FTX’s bankruptcy.

Several markets have already offered spot bitcoin ETFs

bitcoin ETFs

Although several markets have already offered spot bitcoin ETFs, US approvals are anticipated to signal a significant turning point for the most popular and liquid cryptocurrency unit.

Previously, US institutional and individual investors had to choose between purchasing on unregulated exchanges or paying more for exchange-traded funds (ETFs) that invest in bitcoin futures; now, they may have direct exposure to the currency through a regulated instrument.

“It’s a huge milestone; it’s recognition of bitcoin being a large-scale traditional investment,” commented Jad Comair, chief executive of Melanion Capital, the first business to create a bitcoin-themed ETF in the EU. “We’re letting people into Wall Street.”

The ruling also represents the SEC’s about-face. For over a decade, the regulator fought against spot bitcoin ETFs, citing the manipulated and fraudulent nature of cryptocurrencies as the reason.

However, Grayscale was able to overturn the watchdog’s previous rejection of a spot Bitcoin application last year. In August, a federal appeals court determined that the judgment lacked reasonable basis, leading to calls for the SEC to reconsider its position.

Although some ETF watchers are skeptical that huge quantities would pour into the products, crypto aficionados are wagering that the ETFs will significantly increase demand for digital assets. In 2021, ProShares raised $1 billion in just two days after launching the first exchange-traded fund (ETF) based on bitcoin.

However, organizations concerned about consumer safety and investors’ capital have voiced concerns that making the product accessible through an ETF would lure regular people to put their money into a market that has a history of scandals and wild price swings.

If approved, the clearance will “unleash crypto predators on tens of millions of investors and retirees but will also likely undermine financial stability,” according to Better Markets president Dennis Kelleher.

In a statement, SEC Chair Gary Gensler attempted to diffuse the conflict. Investors should “remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto,” he said, adding, “While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin.

“After a day of gains of up to 1.5% due to the misleading post on the SEC’s X account, bitcoin prices fell by as much as 3.4% following the regulator’s correction. Aspiring exchange-traded funds are comparable as they all put their money into Bitcoin. Except for Grayscale and Hashdex, all firms want to debut naturally.

Grayscale wants to turn its $29 billion bitcoin trust into an exchange-traded fund (ETF), and Hashdex wants to turn its bitcoin futures fund into a spot fund. The new ETF suppliers are already engaged in a pricing battle with each other. Several investment firms have pledged to forego costs in the first few months of trading, and this week alone we’ve seen updates from BlackRock, Fidelity, and others that state their fees would be less than half a percent.

The chief executive of Grayscale, Michael Sonnenshein, told the Financial Times that his business has reduced its cost from 2% to 1.5% but had no plans to decrease it anymore.

He went on to say that GBTC “is coming to market in a very differentiated way from other ETF issuers that are starting from zero and are just getting their product launched” since it is a conversion from an existing product.

Cathie Wood, of Ark, described Bitcoin as a “public good” and expressed her confidence in utilizing the product as a loss leader. Her business would not apply its 0.21% charge until six months after debut or until its ETF exceeds $1 billion.

“Our goal is to ensure that information is accessible and made as accessible as possible,” Wood stated to the Financial Times. Making the most money possible is not our goal here. Other actively managed goods are available to us and can be of assistance.

The funds will deviate from the standard practice of exchange-traded funds (ETFs) by using cash instead of the underlying asset—bitcoin in this case—to generate and redeem new shares.

Despite the SEC’s initial opposition to a spot bitcoin ETF for over a decade, ProShares was able to establish the first of several ETFs that contain bitcoin futures in late 2021.

Notable ETF providers soon followed Grayscale’s lead and submitted their applications; the SEC then began collaborating with these firms to refine their plans.

The issuers have recently moved to a cash-based creation process, disclosed which financial institutions would issue and redeem shares, and outlined their plans to prevent market manipulation.

Wood said that the SEC, while being “one of the most skeptical regulators in the world and has gotten to the finish line and approved it,” maintained its stance. “And you know, this has been the subject of extensive battle testing.”

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Bitcoin ETF: Cryptocurrency Swings As Watchdog X Account ‘Compromised’

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Bitcoin surged temporarily on Tuesday when the US markets regulator’s X account (previously Twitter) announced the approval of new cryptocurrency exchange-traded funds (ETFs).

The Securities and Exchange Commission (SEC) later deleted the message, stating that its account had been “compromised”.

The social networking company stated that the compromised account did not result from a system breach.

US regulators are scheduled to announce the new ETFs this week.

The bogus post was published on the SEC’s official X account shortly after 16:00 Washington time (21:00 GMT).

bitcoin

Bitcoin ETF: Cryptocurrency Swings As Watchdog X Account ‘Compromised’

It stated that the Securities and Exchange Commission “grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges”.

Social media users and business news sources quickly shared and quoted the tweet.

Within minutes, SEC Chair Gary Gensler tweeted a response on his personal X account contradicting the incorrect announcement: “The @SECGov Twitter account was compromised, and an unauthorized tweet was posted.” The SEC has not approved the listing or trading spot bitcoin exchange-traded products.”

“The SEC has determined that there was unauthorized access to and activity on the @SECGov x.com account by an unknown party for a brief period of time shortly after 4 pm ET,” a spokeswoman for the Securities and Exchange Commission said.

“That unauthorized access has been terminated,” they went on to say. “The SEC will work with law enforcement and our partners across government to investigate the matter and determine appropriate next steps relating to both the unauthorized access and any related misconduct.”

Later on Tuesday, X announced that it had finished a preliminary investigation into the bogus post on the SEC’s account and determined that it was not the result of a breach of the social media platform’s systems.

“We can confirm that the account @SECGov was compromised and we have completed a preliminary investigation,” X stated.

bitcoin

Bitcoin ETF: Cryptocurrency Swings As Watchdog X Account ‘Compromised’

“Based on our investigation, the compromise was not due to any breach of X’s systems, but rather due to an unidentified individual obtaining control over a phone number associated with the @SECGov account through a third party,” according to the statement.

“We can also confirm that the account did not have two-factor authentication enabled at the time the account was compromised.”

Bitcoin surged to about $48,000 (£37,800) shortly after the incorrect article before falling back to roughly $46,000.

Investors are eagerly anticipating the SEC’s news on the potential approval of spot bitcoin ETFs, which is expected this week.

It would be a significant milestone for the cryptocurrency market’s acceptance in mainstream financial markets.

Several asset management firms have sought SEC clearance for spot Bitcoin ETFs.

ETFs are portfolios that allow investors to wager on various assets without having to buy them individually.

bitcoin

Bitcoin ETF: Cryptocurrency Swings As Watchdog X Account ‘Compromised’

They trade like shares on stock exchanges, and the performance of the entire portfolio in real time determines their value.

Some ETFs already indirectly contain Bitcoin; however, a spot Bitcoin ETF will buy the cryptocurrency directly, “on the spot” at its current price throughout the day.

Bitcoin is a decentralized digital currency that operates without a central authority or banks. It allows for peer-to-peer transactions to take place directly without the need for intermediaries. The technology behind bitcoin, known as blockchain, ensures the security and transparency of these transactions.

With a limited supply of 21 million coins, bitcoin is often seen as a hedge against inflation and a store of value. Its fluctuating price has led to both skepticism and enthusiasm among investors and has sparked discussions about the future of finance and monetary systems.

SOURCE – BBC

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