Bitcoin, the world's largest cryptocurrency, has set a new record high and crossed 71,000 US dollars (or £55,272).
This surge happened on Monday when it reached an all-time high of 71,830.99 dollars, up by 3% in just the last 24 hours according to data from Binance. The boost comes after the UK's Financial Conduct Authority (FCA) revealed it would "not object" to the creation of exchange-traded notes backed by cryptocurrencies for the first time.
Other positive market events, such as an increase in hopes for a cut in US interest rates following higher unemployment data, also contributed to this rise. This decision by the FCA follows similar rulings from regulators across the globe.
Bitcoin's value had been on the rise in recent times after the US Securities and Exchange Commission (SEC) gave its approval to include cryptocurrencies into more mainstream investment products. It's worth noting that the first Bitcoin exchange-traded funds (ETFs) started trading early this year in January after getting reluctant approval from SEC.
However, the FCA clarified that while these crypto-based products are available to professional investors, they are still off-limits for everyday retail investors. The Financial Conduct Authority (FCA) has said: "With increased insight and data due to a longer period of trading history, the FCA believes exchanges and professional investors should now be able to better establish whether cryptoasset-backed exchange-traded notes (cETNs) meet their risk appetite."
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They also mentioned: "The FCA continues to believe cETNs and crypto derivatives are ill-suited for retail consumers due to the harm they pose. The FCA continues to remind people that cryptoassets are high risk and largely unregulated. Those who invest should be prepared to lose all their money."
The regulator emphasised that exchanges must have good controls in place to make sure trading is fair and professional investors are protected. After the US Securities and Exchange Commission (SEC) allowed crypto ETFs, lots of investors started putting money into Bitcoin ETFs from big companies like BlackRock and Fidelity.
Now the FCA is doing something similar, and it's expected that people will start investing in the UK too. The London Stock Exchange said on Monday that it will soon take applications for Bitcoin and Ethereum ETNs, starting in the second quarter.
Bitcoin's price has gone up lately because of the upcoming "halving" in April, which makes fewer new coins available and happens every four years. Experts believe that a shortage in supply and a growing investor appetite have jointly driven up Bitcoin prices.
"There has been 10 billion US dollars poured into the Bitcoin ETFs that launched earlier this year, and there are signs that a small allocation to alterative asset classes like Bitcoin are worthwhile for longer term investors and institutional investors.
"We think that these two factors, along with a supportive macro backdrop, relatively strong market sentiment and the prospect of interest rate cuts from the Fed are also helping to propel Bitcoin higher."
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