Bitcoin soared to a new record above $71,000 on Monday, showcasing an unabated surge in the cryptocurrency’s value. The Financial Conduct Authority (FCA) in the UK joined other regulators in permitting recognized investment exchanges to introduce crypto-backed exchange-traded notes. Bitcoin experienced a spike of up to 4.8%, reaching $71,677 in European trading, marking a 70% gain for the year so far.
The cryptocurrency’s rally has been fueled by significant investments in new spot bitcoin exchange-traded funds and optimism about potential interest rate cuts by the Federal Reserve. Although capital flows into the top 10 US spot bitcoin exchange-traded funds slowed, reaching a two-week low in the week to March 8, they still amounted to nearly $2 billion.
DailyFX strategist Nick Cawley noted that Bitcoin’s surge at the beginning of the week influenced the broader cryptocurrency market. Additionally, the upcoming halving event in April, where the supply of bitcoin will decrease, has contributed to the positive momentum.
News of the London Stock Exchange’s (LSE) plan to accept applications for bitcoin and ethereum exchange-traded notes in Q2 may have also contributed to the upward push, according to Cawley.
The FCA clarified that these products would be limited to professional investors, such as authorized investment firms and credit institutions operating in financial markets, warning that crypto exchange-traded notes pose risks to retail investors.
Despite the warning, demand for cryptocurrencies is growing within the investment community. Asset managers currently hold the largest bullish position in bitcoin futures on record. In the week to March 5, the net long position held by asset managers reached 15,531 lots, valued at $5.5 billion based on the current bitcoin price.
Ether, another cryptocurrency, also experienced a rally, climbing 2.1% to nearly $4,000, close to its highest level in two years. Speculation that US regulators might approve the listing of spot ether exchange-traded funds this year has driven its price up by 75% in 2024.
