Amanda Cooper and Harry Robertson
LONDON (Reuters) – It hit a record high above $71,000 on Monday as the largest cryptocurrency showed no signs of slowing.
Britain’s financial watchdog on Monday became the latest regulator to pave the way for digital asset trading products, saying on Monday it will now allow established investment exchanges to launch exchange-traded notes backed by cryptocurrency.
Bitcoin rose as much as 4.8% to a record $71,677 in European trading, bringing its gains for the year to 70%.
The rise in popularity of the world’s most valuable cryptocurrency comes thanks to an influx of funds into new bitcoin spot exchange-traded funds and hopes that the Federal Reserve will soon cut interest rates.
Inflows into the 10 largest U.S. spot bitcoin exchange-traded funds slowed to a two-week low in the week ending March 8 but still reached nearly $2 billion, according to LSEG data.
“Bitcoin started the week with a surge, dragging the rest of the crypto space with it,” said DailyFX strategist Nick Cawley.
Bitcoin’s supply, limited to 21 million tokens, will decrease in April when the so-called halving event occurs.
Every four years, the rate at which new supplies are released into circulation, as well as the rewards for cryptocurrency miners, are halved, which tends to support the price.
“Earlier news that the LSE plans to accept bids for Bitcoin and Ethereum ETNs in the second quarter may have also contributed to today’s gains,” Cawley said.
The UK regulator said the products would only be available to professional investors, such as investment firms and lending institutions authorized to deal with financial markets, the Financial Conduct Authority (FCA) said in a statement.
The FCA has warned that exchange-traded notes (ETNs) – bonds issued by financial institutions that track the performance of underlying assets – are harming retail investors.
However, demand in the investment community is growing.
Asset managers currently hold the biggest bullish position on Bitcoin futures ever, according to weekly data from the U.S. Commodity Futures Trading Commission.
In the week leading up to March 5, asset managers’ net long position, typically interpreted as covering the holdings of institutional investors such as mutual funds and pension funds, rose to 15,531 lots worth $5.5 billion based on the current price of Bitcoin.
That’s more valuable than asset managers’ $2.78 billion long position in sterling or their $1.49 billion bearish position on the Japanese yen versus the dollar, according to LSEG.
Ether rose 2.1% and jumped $4,000, its highest in two years. Rumors that US regulators may approve the listing of spot ether ETFs this year have driven the price up 75% this year.