Bitcoin hits a new high above $73,000: Here's what is driving this dizzying surge

Bitcoin has surged to a record high, surpassing the $73,000 mark. The cryptocurrency crossed the milestone on Wednesday, gaining over 2% in trade.

Boost from exchange traded funds

This dizzying rally in Bitcoin prices is mainly being attributed to the introduction of spot Bitcoin Exchange Traded Funds in the United States. These ETFs, which were approved by the US market regulator, US Securities and Exchange Commission (US SEC), were launched in January 2024.

What are spot Bitcoin ETFs?

ETFs, or exchange-traded funds, are investment tools that follow the performance of a group of assets or commodities.

A spot Bitcoin ETF is specifically designed to track the current price of Bitcoin. This means that when the price of Bitcoin changes, the value of the ETF reflects those changes, allowing investors to easily invest in Bitcoin without directly owning it.

The upcoming halving of supply

Another factor that is likely influencing the recent surge is the next Bitcoin halving, expected in April 2024. The Bitcoin having will cut the mining reward in half, potentially impacting supply and spiking the price due to supple demand disparity.

Bicoin demand soars, suply to dip

Each week 6,300 new bitcoins are mined but the demand from the ETFs has been overwhelming as new supply can't keep up, leading to higher prices.

After the halving that is going to take place around May, only 3,150 new bitcoins will be minted each week, with demand dwindling and supply increasing the price is expected to surgery even more

Expert take on whether it's a good time to buy

As per a Bloomberg report, Peter Mladina, the executive director of portfolio research for Northern Trust Wealth Management, believes that Bitcoin doesn’t fully meet the criteria that make something a currency, and its volatility makes it a poor store of value. He doesn’t recommend devoting a large amount of a portfolio to Bitcoin, but added that “maybe for some people there could be a small allocation."

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