Bitcoin hits all-time high above $69k after two years - then TUMBLES 10%
- Bitcoin hit a high of $69,200 in a rally spurred by the approval of BTC ETFs
- It comes ahead of a so-called halving in April - cutting supply of new coins in half
Bitcoin hit a record high on Tuesday after a more than two year wait - then immediately tumbled ten percent.
The cryptocurrency hit $69,200 around 10am ET - topping November 2021's all-time peak of $69,000.
But it then quickly pulled back and hit a low of $60,793.80 early afternoon - down 10 percent on its highs. It recovered and was trading at $62,780 at 3.30pm - still down just under 7 percent.
Experts say these sharp corrections are likely over coming months, even as Bitcoin 'performs well'.
The surge over the past month came from investors pouring money into newly-approved exchange-traded funds (ETFs) that track its value.
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Bitcoin hit a high of $69,200 on Tuesday March 3, 2024 - topping November 2021's all-time peak of $69,000
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Bitcoin then fell sharply after hitting highs
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The price of both gold and Bitcoin have risen in recent months as speculation the Federal Reserve will cut interest rates soon mounts
Bitcoin's nearly 160 percent ascent since October, of which 44 percent came in February alone, marks a sharp contrast to 2022.
The surge over the past month has in part been put down to baby boomers now able to invest in Bitcoin after it was approved for mainstream funds. The US securities regulator in January approved 11 Bitcoin ETFs, which can be bought and sold like stocks.
Their availability on the market dramatically widened the opportunity for institutional and individual investors to get exposure to Bitcoin.
Last week, Bitcoin ETFs saw a net inflow of around $1.7 billion, meaning money going in has topped $7.4 billion since their introduction in January, according to Fineqia.
'The flows are not drying up as investors feel more confident the higher the price appears to go,' said Markus Thielen, head of research at crypto analytics house 10x Research in Singapore.
But some experts urge caution.
'The market is positioned for a steep correction, possibly between 10 percent and 20 percent,' said Ed Tolson, CEO and founder of the crypto hedge fund Kbit.
'Over the next few quarters, we expect bitcoin to perform well, but with sharp corrections along the way.'
Bitcoin has also gotten a boost from the prospect that the Federal Reserve will soon cut US interest rates.
That can have the effect of prompting investors to shift their capital into assets that are higher yielding or more volatile - like Bitcoin or gold.
Further fueling the prospects for Bitcoin is the upcoming halving. The process happens every four years and cuts the rate at which tokens can be mined in half.
Bitcoin is limited to a supply 21 million, of which 19 million have already been mined.
Other experts warn of big losses in the past for Bitcoin investors.
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Latih Khalaf, head of investment analysis at AJ Bell, said investors should be cautious of Bitcoin
'The Bank of International Settlements estimates that around three quarters of Bitcoin buyers between 2015-2022 were likely to have lost money,' said Latih Khalaf, head of investment analysis at AJ Bell.
That is the case even though there was a significant rise in the price of the cryptocurrency over that timeframe.
Khalaf said those losses were incurred because investors 'got sucked in at precisely the wrong time,' like when Bitcoin made headlines.
He also noted that the cryptocurrency still faces significant regulatory hurdles, making its future uncertain.
'As ever, retail investors shouldn't bet their shirt unless they're willing to lose it,' he said.