The much anticipated new bitcoin all-time high was reached on Wednesday after the cryptocurrency hit a record $66,000, amplifying crypto market value.
Bitcoin rose 3.7% to hit as high as $66,477 on Tuesday, bringing its gain for the year to almost 130%. The largest digital currency by market value gained more than 300% last year and 95% in 2019 after tumbling 73% the previous year.
The new high came following the successful launch of the first US bitcoin futures exchange-traded fund.
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“Clearly, the launch of a Bitcoin futures ETF in the U.S. has sent prices soaring to these levels,” said Leah Wald, chief executive at Valkyrie Investments, which has an application out for a futures-based fund. “Traders and investors perhaps see this is precursor to the holy grail — a spot Bitcoin ETF — and their optimism is pouring into the largest cryptocurrency at a furious pace, with all money FOMOing into the trade from all corners of the market.”
Ethereum also rose 7.4% to cross back over the $4,000 level. The world’s second-largest cryptocurrency reached 4,104,61 on Wednesday.
ETF, the ProShares Bitcoin Strategy, which tracks bitcoin futures contracts pegged to the future price of the cryptocurrency, rose about 5% on its first day of trading Tuesday.
Bitcoin has found a place in the hearts of many investors looking for an inflation hedge, and they are betting big wads of cash on it.
“Bitcoin would be a great hedge. There is a plan in place for crypto and clearly it’s winning the race against gold at the moment … I would think that would also be a very good inflation hedge. It would be my preferred one over gold at the moment,” billionaire investor, Paul Tudor Jones told CNBC’s Squawk Box.
Bitcoin’s biggest proponents back controversial arguments that the virtual currency is a store of wealth and a hedge against the most potent threat from inflation in many years.
However, not every crypto investor is impressed, as several people in the market would prefer ETF that tracks spot prices rather than futures. But the ETF was a brilliant idea to many others. Bloomberg reported on the enthusiasm of investors across institutions.
Wall Street
Bank of New York Mellon Corp., Goldman Sachs Group Inc. and Morgan Stanley are among firms offering crypto-related services. Dawn Fitzpatrick, chief investment officer of Soros Fund Management LLC, said her firm holds some coins and that crypto “has gone mainstream.”
At the same time, there is still a long way to go. For instance, SkyBridge Capital founder Anthony Scaramucci said that while there’s a “feeding frenzy” in crypto among about 10% of financial-services firms, the vast majority are hesitant about the asset class.
Over the past few years, a whole new crypto-economy has formed. Non-fungible tokens or NFTs — which allow holders of digital art and collectibles to track ownership — have surged into the limelight.
Decentralized Finance
So has the decentralized finance — DeFi — ecosystem, which allows people to lend, borrow, trade and take out insurance directly from each other, without use of intermediaries such as banks.
With turnover of almost $1 billion, the ProShares fund debut was behind only a BlackRock carbon fund for a first day of trading, the latter ranking higher due to pre-seed investments, according to Athanasios Psarofagis at Bloomberg Intelligence. The total market value of cryptocurrencies exceeds $2.5 trillion.
Bitcoin has come a long way this year, defying China’s crackdown and the apathy stemming from its carbon footprint to record its all-time high. It is expected to surge further in November, as investors seek strong support on $65,000.