Crypto bros rejoice. Bitcoin has increased in value to nearly $38,000 as of Wednesday, its highest valuation in a year — though, for those keeping score, nowhere near its halcyon days of November 2021 when it crested over $65,000 — and one that notches startling gains of more than 38 percent over the past month.
The recent price increase is likely due to some combination of softening federal interest rates, a general sense that Sam Bankman-Fried's conviction over his misdeeds at FTX serves as a reset for the beleaguered industry, and the Securities and Exchange Commission approving a bitcoin exchange-traded fund (ETF).
Asset management firm BlackRock had filed for a bitcoin ETF back in June, and then took the first steps towards an ETF for rival cryptocurrency ether earlier this month, which has sparked optimism in the cryptocurrency world after months of low prices.
An ETF is basically a package of securities that track an index or commodity. In the case of the bitcoin ETF, investors would not own the bitcoin directly but the ETF would be pegged to its value. But most importantly, a bitcoin ETF recognized by the SEC would mark a milestone because it signals institutional approval.
But facts remain that bitcoin and other cryptocurrencies are incredibly volatile assets, and mining them is still harmful to the environment, despite some efforts to make the process more green.
It remains to be seen whether bitcoin will ever reach the heights it once had back in 2021, when people were flush with stimulus money, bored from the grinding impact of the pandemic, and bombarded by bitcoin mania in the form of Super Bowl advertisements.
And while some are excited about a bitcoin resurgence, the crypto is an utter failure in terms of its intended use as a decentralized form of digital money. It still largely remains a speculative asset among normal investors, transaction fees remain high, and it's a channel for illegal activities. So think twice before entrusting it with your hard-earned retirement assets.
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