- Bitcoin hit a record price of $69,000 in late 2021 before plunging
- In 2023, the price of the cryptocurrency has more than doubled, increasing by approximately 121%.
- There have been four spikes in the digital currency’s price value since the year began.
Bitcoin has more than doubled in value by 2023 after a turbulent ride in recent years.
After reaching a record price of $69,000 in late 2021, the cryptocurrency’s value subsequently plummeted by more than three-quarters in the following 12 months.
But bitcoin has soared about 121 percent to surpass $37,000 in 2023, despite examples of high-profile financial crimes in the world of cryptocurrencies and concerns about their environmental impact and utility.
Turbulence: After reaching a record price of $69,000 in late 2021, bitcoin’s value plummeted the following year. But during 2023, it has more than doubled its price
There have been four major spikes in the digital currency’s value since the year began, the first of which occurred in mid-to-late January, when a group of large investors, known as “whales,” bought bitcoin in significant quantities.
That coincided with markets predicting that interest rates would begin to fall after central banks continually raised them last year to try to reduce inflation.
Bitcoin surged again in March when the collapse of Silicon Valley Bank caused major upheaval in the US and European banking systems, and Credit Suisse had to be rescued by rival UBS.
The uncertainty caused more retail investors to decide to invest their money in perceived safer havens, including gold and larger cryptocurrencies such as Bitcoin and Ethereum.
By the end of March, bitcoin had risen to about $28,500, up 71 percent from the beginning of the year.
Over the next three months, the currency enjoyed a couple of small ups and downs before trending lower, in part due to Chinese regulators banning financial institutions from supporting Bitcoin.
However, it spiked in mid-June when BlackRock, the world’s largest asset manager, filed an application with the U.S. Securities and Exchange Commission to launch a spot bitcoin exchange-traded fund.
Unlike a futures-based ETF, a spot bitcoin ETF is an investment vehicle that directly owns some bitcoins through which investors have exposure without having to own them.
The SEC has been reluctant to sanction such funds under Chairman Gary Gensler, in part because of bitcoin’s volatility and its widespread use by scammers.
But in October, it decided not to challenge a court ruling that said the watchdog was wrong to reject an application by Grayscale Investments to convert its crypto fund into an ETF.
That triggered bitcoin’s fourth and final major rally of 2023. It is now up more than a third in the past month.
Shortly after the SEC decided not to appeal, BlackRock’s iShares ETF appeared on the website of clearinghouse Depository Trust & Clearing Corporation before being taken down just hours later and reappearing shortly after.
BlackRock’s ETF is one of 12 that the SEC could approve in a “window” that lasts until Nov. 17, according to Bloomberg ETF analysts James Seyffart and Eric Balchunas.
Prior to this, investors have been pouring money into alternative crypto assets, such as ethereum, BNB, and dogecoin, driving up Bitcoin prices further.
If one gets the nod, this could send the price of bitcoin soaring even more as pension funds and retail and institutional investors become more likely to invest in cryptocurrencies.
If none are accepted, Seyffart and Balchunas have said there is “a 90 percent chance” it will happen before the SEC’s official Jan. 10 deadline.
Questions and Answers: THE PROS AND PROS OF BITCOIN
WHAT IS BITCOIN?
You will often hear it described as a cryptocurrency, which is not very enlightening. In simple terms, it is virtual money, without physical bills or coins. It was invented by someone who claimed to be Satoshi Nakamoto and to be Japanese, but his true identity is unknown. Bitcoin, like other cryptocurrencies, has been associated with illicit activities due to the anonymity of buyers and sellers. But for many, both institutions and individuals, bitcoin has become an investment asset.
HOW DOES IT WORK?
Bitcoins are stored in a digital wallet on smartphones or computers. Transactions are recorded on Blockchain, the “decentralized” online ledger behind the currency. In theory, you can use bitcoins to pay for goods and services, although they are not accepted everywhere. Or you can buy it in the hope of making a profit.
WHERE CAN YOU BUY IT?
Anyone with access to a computer or smartphone can buy bitcoins through an exchange. You will have to pay trading fees on top of the cost of the bitcoin.
HOW MUCH DOES IT COST?
Bitcoin is not backed by any tangible asset or underlying commodity like gold, so it has no intrinsic value. It’s “worth” what people are willing to pay, and that has been volatile, although in recent years it has stabilized a bit.
Today it is around $30,000. A year ago it was at $23,400, two years ago at $31,000 and in July 2020 at $9,180. In July 2019 the price was $10,500, in 2018 $7,500 and in 2017 $2,250. A decade ago, one bitcoin was worth $90.
I SHOULD BUY?
It depends on whether you believe Bitcoin will increase in value. It is a huge risk. The City’s watchdog, the FCA, recently reminded savers that they should be prepared to lose all the money they invest in bitcoin, so they should only invest the cash they can afford to lose. If things go wrong, bitcoin transactions largely fall outside regulators’ safety nets.