Bitcoin has gone parabolic lately, soaring some 70 per cent this year and surpassing November 2021′s all-time high.
Multiple catalysts have driven the rally.
Scarcity has long been seen as a key factor supporting Bitcoin, and next month sees its fourth “halving”, with production about to be cut 50 per cent. Bitcoin rallied in the months following its last halving in May 2020, and speculators are betting on another price surge.
The decision by UK regulators to give the green light to exchange-traded notes (ETNs) tied to Bitcoin has also helped sentiment. However, the real game-changer has been January’s launch of multiple Bitcoin exchange-traded funds (ETFs) in the US, which has given the cryptocurrency a new respectability.
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BlackRock’s bitcoin ETF already has more than $14 billion in assets under management, having become the fastest-growing ETF in history. In total, the 10 Bitcoin ETFs have over $55 billion in assets, a level of success that Bloomberg ETF analyst Eric Balchunas describes as “simply absurd”.
[ Bitcoin's real value is based on the greater fool theoryOpens in new window ]
[ Bitcoin bulls are not the bigger foolsOpens in new window ]
Sceptics might say Bitcoin’s soaring price is similarly absurd. Nevertheless, says Deutsche Bank’s Jim Reid, “whether you’re a cynic or a convert, whether you think it’s cheap or in a bubble, what’s clear is that bitcoin is becoming increasingly institutionalised”.
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