The expectation that more mainstream investors will show fresh interest in cryptocurrencies is fueling their rise.
In Short
- Bitcoin’s price surge above $65,000 signals renewed interest in cryptocurrencies, driven by expectations of increased mainstream investment due to etf approvals.
- Despite regulatory hurdles and skepticism from financial authorities like the sec and vanguard, billions have been invested in cryptocurrency etfs.
- Conflicting views persist regarding cryptocurrency’s status as an investment, with some highlighting its speculative nature and others touting its potential for growth and diversification.
- The classification of cryptocurrency as a commodity underscores its volatility and lack of intrinsic value, raising concerns about its suitability for investment portfolios.
TFD – Delve into the debate surrounding cryptocurrency investments as Bitcoin surges to new highs amidst ETF approvals. Understand the contrasting perspectives on its potential as an asset class and its impact on investment portfolios.
On Monday, the price of bitcoin surged above $65,000, bringing it very close to its peak, which was attained in November 2021.
The value of the cryptocurrency has increased by 48% in 2024 and is getting close to the all-time intraday high of more above $68,000.
The expectation that the introduction of bitcoin exchange-traded funds, or ETFs, will increase the number of bitcoin buyers is driving the most recent surge.
The Securities and Exchange Commission approved these exchange-traded funds (ETFs) in January with the goal of facilitating investors’ exposure to bitcoin price fluctuations as part of a diversified portfolio without requiring them to go through the sometimes burdensome process of actually owning the digital coins.
Billions of dollars have already been invested in the ETFs combined.
Within the cryptocurrency community, there is also hope for a price surge following the technical “halving” event that takes place in April. As a result, the rate at which new bitcoin are being created decreases. As a result, prices increase if demand stays the same or even increases.
Bitcoin is still a very contentious investment, and a lot of mainstream financial advisors and market authorities advise against buying it. As an example, SEC Chair Gary Gensler described bitcoin as a “speculative, volatile asset” and stated that the agency’s approval of ETFs did not support the cryptocurrency.
And executives at financial behemoth Vanguard reiterated that opinion in a blog post in January, saying the company does not provide cryptocurrency products because they are “more of a speculative than an investment.”
“With equities, you own a share of a company that produces goods or services, and many also pay dividends,” Vanguard stated. “You receive interest payments on bonds in a continuous manner. Real assets with the ability to offset inflation, satisfy consumer demands, and be included in specific portfolios are commodities.”
“While crypto has been classified as a commodity, it’s an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio.”
Conclusion
The surge in cryptocurrency prices, particularly Bitcoin, underscores the growing interest in digital assets among investors. While ETF approvals signal a potential avenue for mainstream investment, conflicting opinions persist regarding the suitability of cryptocurrencies as an investment class. As the debate continues, investors must navigate the volatility and regulatory uncertainty surrounding cryptocurrency investments, weighing the potential for gains against the risks of disruption within investment portfolios.
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