By Amanda Cooper and Ankur Banerjee
LONDON/SINGAPORE (Reuters) -Bitcoin hit a record high on Tuesday, fueled by investors pouring money into U.S. spot exchange-traded crypto products and the prospect that global interest rates may fall.
The world’s largest cryptocurrency hit a high of $69,202, topping November 2021’s all-time peak of $68,999.99. Investor interest has increased since the Securities and Exchange Commission approved 11 spot bitcoin ETFs in late January.
Bitcoin’s meteoric nearly 160% ascent since October, of which 44% came in February alone, marks a sharp contrast to 2022, when the market was beaten into an 18-month long crypto winter, plagued by a string of high-profile corporate bankruptcies and scandal.
In addition to demand from a wider pool of investors, bitcoin, and crypto generally, has gotten a boost from the prospect of the Federal Reserve cutting U.S. interest rates, which often prompts investors to divert capital into assets that are higher yielding or more volatile.
Investors have lapped up crypto, mega-cap technology stocks and investment-grade corporate bonds in particular this year.
Analysts say bitcoin also benefited ahead of April’s so-called halving event – a process that takes place every four years in which the rate at which tokens are released is cut in half, along with the rewards given to miners.
Supply of bitcoin is limited to 21 million, of which 19 million have already been mined.
Despite its recent popularity, for many investors, bitcoin is simply too volatile and lacks enough real-world applications to be anything other than a speculative asset.
Yet, in addition to the cocktail of flows of money into ETFs, the prospect of constrained bitcoin supply and an eventual decline in U.S. interest rates, some companies are adding crypto to their corporate coffers.
In February, software firm MicroStrategy – a long time holder of bitcoin – said it had recently bought about 3,000 more bitcoins for $155 million, while social media platform Reddit also said in a regulatory filing it had bought small amounts of bitcoin and ether.
(Reporting by Amanda Cooper and Ankur Banerjee; Editing by Lisa Shumaker)
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