The price of bitcoin has hit an all-time high as the world’s largest cryptocurrency has been buoyed by growing demand from investors.
It surpassed the 69,000 US dollar (£54,200) mark during the day, topping a previous high in November 2021 where it was just a fraction below that level.
The rally follows the cryptocurrency being given the green light to be adopted into more mainstream investment products in the US last month.
The US Securities and Exchange Commission reluctantly approved trading of the first bitcoin exchange-traded funds (ETFs) in early January.
An ETF tracks the price of an asset such as gold, bonds or cryptocurrencies, meaning people can invest without having to buy the asset themselves.
But the US regulator remained sceptical about cryptocurrencies, saying it “did not approve or endorse bitcoin” in its decision.
Nevertheless, the move prompted a wave of investors pouring money into spot bitcoin ETFs launched by major investment firms such as BlackRock and Fidelity.
Furthermore, bitcoin is approaching its next “halving” event in April which limits the rate of new coins being released, and happens roughly every four years.
The expectation of limited supply alongside growing investor demand has helped inflate prices, experts said.
Laith Khalaf, head of investment analysis at AJ Bell, said the surge in Bitcoin reflects a “broader rally in risk assets”, including tech stocks.
He added: “The rise in bitcoin has also been galvanised by the launch of spot ETFs in the US, which is seen as a crucial step towards integrating bitcoin and cryptocurrencies into the mainstream financial ecosystem, and potentially paving the way for a global rollout.
“The regulatory approval of these products also adds a layer of legitimacy to bitcoin, amidst concerns raised by policymakers, including in the UK.”
But Mr Khalaf said Bitcoin is “largely driven by sentiment”, adding: “If you buy some, you’re relying on someone paying more than you further down the line to turn a profit.”
“The long-term adoption of cryptocurrencies by consumers, businesses, and investors remains highly uncertain,” he added.
The price of bitcoin reached around 69,170 US dollars (£54,370) on Tuesday afternoon, according to data from crypto exchange Binance.