Bitcoin reached a new record high on Wednesday, surpassing $69,000 for the first time.
It has since fallen back slightly, and is valued at around $65,000 as of Thursday afternoon.
Cryptocurrency has enjoyed a strong couple of months, with Ethereum also hitting an all-time high and meme currency Shiba Inu Coin turning some people into millionaires.
Here is why Bitcoin is surging at the moment, and what could happen next.
Why did Bitcoin hit a record high?
The spike has been put down to the United States reporting higher-than-expected inflation.
Bitcoin’s price jumped by around $2,500 – roughly 4 per cent – within 45 minutes of Labour Department’s monthly consumer price index report, which showed consumer prices rose about 6.2 per cent in October compared to the previous year.
It saw Bitcoin’s market cap reach $1.3 trillion, though it has since dipped back to $1.2 trillion.
Bitcoin’s recent period of strength comes off the back of the launch of the first US Bitcoin futures-based exchange-traded fund (ETF), which opened last month.
When Bitcoin grows, other cryptocurrencies tend to follow suit. This has been the case for the likes of Ethereum, Dogecoin, Cardano and more.
What is en ETF?
Simply put, an ETF allows people to invest in something without having to actually purchase it, much like buying shares in a company.
As Investopedia explains: “An exchange-traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same way a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities.”
They allow people to purchase a slice of a diversified portfolio, rather than a single asset.
They also open up the market to far more, and potentially far larger investors, who may have been unwilling to purchase coins through crypto exchanges, which can sometimes be complicated and are seen as more risky. The ETF allows investors to make Bitcoin in a more traditional manner.
Bitcoin price prediction
The next big milestone for Bitcoin is a regulator decision expected in the coming days, regarding a a fully-fledged bitcoin ETF, which Michael Saylor, chief executive of business intelligence software company MicroStrategy, said could see trillions pumped into the cryptocurrency.
Luno’s UK manager, Sam Kopelman, said: “The growing optimism in Bitcoin could be down to the upcoming deadline for the SEC response to VanEck’s spot-based Bitcoin ETF on 14 November, with traders trying to front run any good news.”
Banking giant JPMorgan has doubled down on its prediction that Bitcoin could reach $146,000 in the long term, with a short-term price target of $73,000 for 2022.
JPMorgan analyst Nikolaos Panigirtzoglou said: “Digital assets are on a multi-year structural ascent, but the current entry point looks unattractive in our opinion for an investment horizon of 12 months as Bitcoin appears to have returned to overbought territory.”
He added that for Bitcoin to reach the $146,000 prediction it would need to become a lot less volatile.
Should I invest in crypto?
People invest at their own risk and cryptocurrencies are not regulated by British financial authorities.
All crypto investments are risky, but meme coins like Shiba Inu are particularly volatile. You should always do your own research, and you should be prepared to lose everything you invest.
The Financial Conduct Authority (FCA) warned in January: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money.
“If consumers invest in these types of product, they should be prepared to lose all their money.”
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown previously explained the risks to i.
She said: “On top of being extremely volatile, most cryptocurrencies are unregulated, which not only adds another layer of uncertainty but also means that investors have little or no protection against fraud.”
