In a clear-cut development, Bitcoin has surged to a new record price of $73,000 (£57,000), a bull run that started in October last year. This illustrates a resurgence in the Cryptocurrency’s value and a potential shift in matters of financial regulations in the UK. This tremendous milestone was reached on Monday evening when Bitcoin exceeded its previous all-time high of $69,000 (£54,000) set in November 2021.
The surge in the price of Bitcoin is partly attributed to the UK’s Financial Conduct Authority (FCA)’s recent announcement. On Monday, the FCA stated it would not oppose investment exchanges in creating a UK-listed market segment for Crypto asset-backed exchange-traded notes (cETNs). Akin to stocks, cETNs can be traded and offer a new opportunity for UK investors to engage more with Cryptocurrencies.
Still, the FCA clarified that it will not allow these cETNs to be sold to retail investors or the general public. This is solely because of the volatile and largely unregulated nature of Crypto assets. In its statement, the FCA warned that investments in such assets come with a high risk of losing all invested capital.
This development in the UK follows the trend set by the US, where the Securities and Exchange Commission (SEC) has green-lighted the trading of exchange-traded funds (ETFs) that track the price of Bitcoin. However, it’s noteworthy that scepticism remains within the regulatory bodies. Gary Gensler, the chair of the SEC, has previously voiced concerns over Bitcoin, labelling it a speculative and volatile asset prone to illicit uses, including ransomware attacks and terrorist financing.
Amidst these regulatory queries, a critical factor fuelling Bitcoin’s price is the anticipated “halving event”. The halving, which cuts the production rate of new Bitcoins in half, is expected to decrease supply, increasing the Cryptocurrency’s price.
Neil Wilson, the chief analyst at Finalto brokerage firm, sees the FCA’s move as a positive development for the Cryptocurrency world. However, he notes that while Bitcoin has a history of “parabolic” market moves—sharp price increases—the opposite is also possible. With Bitcoin, certainty has become elusive, indicating a possible change in the market dynamics and investor sentiment towards the Cryptocurrency.
Wilson also hints at the broader economic context, pointing out the significant amounts of “spare cash” possibly set aside for investment opportunities towards Bitcoin and similar cryptocurrencies.
As Bitcoin’s bull run continues, the financial investment landscape is evidently evolving. With oversight and regulatory bodies cautiously warming up to the idea of Crypto investments and significant events like Bitcoin halving on the horizon, prepare for more changes. However, the FCA’s warnings serve as a sheer reminder of the volatile and unpredictable nature of Cryptocurrencies, bringing out the high-risk, high-reward profile that has come to define the Crypto market.
Image Source: Adobe Stock
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
