Bitcoin soars to record high following UK approval of crypto asset

The price of the cryptocurrency surpassed $72,000 on Monday.

March 11, 2024, 11:13 AM

Bitcoin soared to a record high of more than $72,000 on Monday after a financial regulator in the United Kingdom gave the green light to a cryptocurrency-backed investment vehicle.

Bitcoin hit $72,166 in early trading on Monday, just days after it surpassed a previous high of nearly $69,000 from November 2021.

After crossing that threshold last week, the price of bitcoin tumbled by 10% before rebounding to its current levels.

The Financial Conduct Authority, the U.K. agency tasked with regulating financial activity, said it will "not object" to exchanges forming a U.K.-listed market segment for crypto asset-backed Exchange Traded Notes, or cETNs.

PHOTO: Bitcoin has climbed over past two months
Bitcoin has climbed over past two months
ABC News, Yahoo Finance

The soon-to-be available financial instruments allow traders to buy and sell assets that fluctuate in price in concert with a given cryptocurrency.

The publicly listed assets enable traders to essentially invest in cryptocurrency but without the inconvenience and technical challenge of acquiring a crypto coin itself.

Despite approving cETNs, the Financial Conduct Authority said the products will remain unavailable to retail investors and cautioned traders about risks associated with cryptocurrency investments.

"The FCA continues to remind people that cryptoassets are high risk and largely unregulated. Those who invest should be prepared to lose all their money," the agency said in a statement.

The move follows a similar decision by the U.S. Securities and Exchange Commission in January, when the agency approved Bitcoin Exchange-Traded Funds, or Bitcoin ETFs.

In similar fashion, a Bitcoin ETF allows investors to buy into an asset that tracks the price movement of Bitcoin without pouring funds directly into the cryptocurrency.

PHOTO: Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), at the SEC headquarters in Washington, DC, Jan. 9, 2024.
Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), at the SEC headquarters in Washington, DC, Jan. 9, 2024.
T.J. Kirkpatrick/Bloomberg via Getty Images, FILE

After the SEC approved Bitcoin ETFs, the price of bitcoin vaulted upward, drawing fuel from an inflow of fresh investment.

Soon after the SEC approved the new investing option, a slew of bitcoin ETFs became available, including offerings from legacy firms such as Fidelity and Franklin Templeton.

The new crypto alternatives unleashed billions of dollars in investment within weeks, Bryan Armour, the director of passive strategies research at financial firm Morningstar, previously told ABC News. The nine leading bitcoin ETFs received a combined $10 billion over the first seven weeks, Armour said.

Since bitcoin ETFs gained approval on Jan. 10, the price of bitcoin has jumped 54%.

Despite the breakneck pace of gains in recent weeks, bitcoin has a record of significant price volatility.

In the immediate aftermath of the bitcoin ETF approval, for instance, the price of bitcoin dropped 15% before rebounding. Over the past five years, bitcoin has plummeted more than 40% on four separate occasions, Armour previously told ABC News.

An ETF amounts to a bucket of securities that gives investors a way to bet that an underlying asset will increase in price without purchasing that asset.

For instance, an ETF for gold allows individuals and institutions to put money on the price movement of the precious metal rather than buy, lug and store the physical item.

A Bitcoin ETF, in turn, gives investors access to the cryptocurrency market without facing the technical impediments and fees associated with navigating a crypto exchange.