Bitcoin is back
Of course, the cryptocurrency never really left. But prices are soaring this year and flirting with $30K again.
Bitcoin prices have skyrocketed this year, nearly doubling so far in 2023 to a near 52-week high of just under $30,000. Bitcoin is up about 10% today and 15% in the past week. We’ve been here before. Volatility in the crypto world is nothing new. But bitcoin bulls have legitimate reasons to be celebrating.
Asset management giant BlackRock’s filing for a so-called spot bitcoin ETF is big news. If the SEC approves the fund, that would further validate the digital currency market.
Now you might be thinking to yourself, aren’t there already a bunch of bitcoin ETFs out there? The answer is yes. But none of them are spot ETFs, meaning it would buy bitcoin at its current price. All the other bitcoin ETFs are based on futures contracts.
BlackRock is the world’s largest asset manager, the owner of iShares. So if it is allowed to operate a spot bitcoin ETF, that could help the crypto market recover from the stunning collapse of FTX and other crypto firms last year as well as regulatory concerns facing Coinbase and Binance.
The good news for bitcoin is also lifting the price of ethereum, the world’s second most valuable cryptocurrency. (According to CoinMarketCap, BTC and ETH make up about 70% of the total value of the crypto maeket.) Ethereum prices have surged more than 55% this year, rising about 7% in just the past week alone.
I still think that most investors should probably stick to BTC and ETH and steer clear of all the numerous other smaller coins, many of which are based on silly memes. (Yes, I’m looking at you Elon Musk.) But BlackRock’s interest in bitcoin is just the latest example of Wall Street’s willingness to accept some cryptos as a viable asset class.
Sure, bitcoin bears like Berkshire Hathaway’s Warren Buffett and Charlie Munger as well as JPMorgan Chase’s Jamie Dimon may continue to mock bitcoin. And they are correct to note that fraud has been a problem in crypto. But isn’t that true of every major asset class? Criminals follow the money, whether it’s in stocks, bonds, commodities or crypto.
Hopefully, more firms like BlackRock will take an interest in bitcoin. If the world’s top financial firms show a real interest in crypto, then that will hopefully help weed out some of the bad actors and show that even if bitcoin may never completely replace the US dollar and other government forms of fiat currency, it is still a legitimate store of value and an asset worth trading….and maybe even buying and holding.