Cryptocurrency breakthrough night: Will everyone soon be able to invest in Bitcoin unhindered?

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Bitcoin is on a wild upward zigzag course: just a year ago, one Bitcoin was worth $17,439. Now it’s over $44,000 again. An increase of almost 160 percent!

The US Securities and Exchange Commission (SEC) is expected to decide on the launch of a Bitcoin ETF late Wednesday evening. There is great anxiety: On Tuesday evening, false news came about the launch of the Bitcoin ETF. Investors rejoiced and the price rose to $48,000. But then came the rejection. The culprit was a hacker attack.

What does Bitcoin ETF trading change? So why did the digital currency gain so much value in one year? Blick answers the most important questions.

There are two main reasons for this: Investors are speculating that the US Federal Reserve and the European Central Bank may soon cut interest rates. According to the latest figures, inflation in the USA was 3.1 percent in November 2023. Inflation in the Eurozone stood at 2.9 percent in December. Bonds with lower interest rates, i.e. fixed interest securities, are less profitable. At the same time, risky assets such as Bitcoin are becoming more attractive.

Second reason: Much of the hope is priced into the current rally. The US Securities and Exchange Commission (SEC) may approve an exchange-traded fund (ETF) for Bitcoin this Wednesday. This will make trading the cryptocurrency much easier. The decision is expected to be made at 23:00 on Wednesday evening.

Exchange Traded Funds (ETFs) are known as investment opportunities in well-known indices such as the Swiss Market Index (SMI). SMI reflects the prices of the 20 largest Swiss companies. This means the risk is spread much more widely than on an individual stock. Investors cannot invest directly in indices such as SMI. However, such indices can be paired with ETFs. Investors own actual shares in companies through ETFs and therefore benefit from dividend distributions.

The US Securities and Exchange Commission has decided to implement spot Bitcoin ETFs. These are based on the current price of the cryptocurrency. Therefore, investors will benefit from price increases as if they were holding their own Bitcoins in their crypto wallet, a digital wallet for coins, so to speak. Of course, this also applies to price drops. The advantage of Bitcoin ETFs is not a wider spread of risk, as with SMI, for example, but rather significantly easier access. The ETF is expected to be traded on numerous major exchanges around the world, without having to overcome technical hurdles such as having your own Bitcoin wallet.

Bitcoin ETFs may also be interesting for pension funds; initially probably mostly from the US. Demand for Bitcoin, thanks to easier access for private and institutional investors, could push the price even higher. Some observers are already speculating that the Bitcoin price is well above the 100,000 franc level. For comparison: Bitcoin’s all-time high is just under 60,000 francs reached in November 2021. However, caution is always advised when it comes to risky cryptocurrencies.

Source :Blick