LONDON: As the largest cryptocurrency continued to rise, Bitcoin reached a record high on Monday of over $71,000.
After announcing on Monday that it will now allow reputable investment exchanges to introduce cryptocurrency-backed exchange-traded notes, the British Financial Watchdog became the most recent regulator to open the door for digital asset trading products.
In European trading, Bitcoin increased by 4.8% to a record $71,677, increasing its gains for the year to 70%.
The world’s most valuable cryptocurrency has experienced a surge in value due to expectations that the Federal Reserve would soon lower interest rates and a rush of money into recently launched spot bitcoin exchange-traded funds.
According to LSEG statistics, capital flows into the top ten US spot bitcoin exchange-traded funds decreased to a two-week low in the week leading up to March 8 but remained close to $2 billion.
According to DailyFX strategist Nick Cawley, “Bitcoin has started the week with a surge, dragging the rest of the cryptocurrency space higher with it.”
The supply of bitcoin, which has a 21 million token cap, will become more scarce in April during the so-called halving event.
The rate at which new supply is added to the market and the amount paid to cryptocurrency miners is cut in half every four years, which helps to keep the price stable.
“News also out earlier that the LSE plans to accept applications for bitcoin and ethereum ETNs in Q2 may have also helped today’s push higher,” Cawley stated.
The Financial Conduct Authority (FCA), the UK regulator, stated in a statement that these products would only be accessible to professional investors, such as investment firms and credit institutions allowed to operate in financial markets.
Exchange-traded notes (ETNs) for cryptocurrency, which are bonds issued by financial institutions that track the performance of underlying assets, have been warned by the FCA to be harmful to individual investors.
Still, the investment community as a whole is seeing an increase in demand.
Weekly data from the US Commodity Futures Trading Commission shows that asset managers currently have the largest bullish position in bitcoin futures on record.
Asset managers’ net long position, which is typically understood to reflect institutional investor holdings like mutual funds and pension funds, increased to 15,531 lots in the week leading up to March 5; at the current price of bitcoin, this represents a $5.5 billion stake.
Based on LSEG statistics, this is worth more than the asset managers’ long position in sterling, which is valued at $2.78 billion, or their bearish position in the Japanese yen versus the dollar, which is valued at $1.49 billion.
Ether increased 2.1%, close to its best level in the past two years at $4,000. The price has increased by 75% this year due to speculation that US regulators may authorise the listing of spot ether ETFs this year.
