Bitcoin is at it once again. The original cryptocurrency broke the $60,000 barrier over the weekend, to a brief high of $62,600, for the first time in six months. The price of Bitcoin stands at $62,300 at the time of writing, putting it in range of the all-time high price of $64,800 reached on April 14.
The uptick was caused by news on Friday that the SEC is set to greenlight Bitcoin futures exchange-traded funds (ETFs). Bitcoin futures will allow investors to speculate on the price of Bitcoin without having to actually buy any of the cryptocurrency and are theoretically less volatile than investing in Bitcoin itself.
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Futures are contracts that commit investors to buy or sell a commodity at a certain price on a certain date. For instance, you could commit to buying a 1 Bitcoin for $100,000 in 5 years. If the price of a Bitcoin on that date is $200,000, you’d have made money. If the price of a Bitcoin on that date is $50,000, you’d have lost money.
A futures ETF is notably different from a standard exchange-traded fund, which Bitcoin enthusiasts have been lobbying for. A typical ETF would give investors exposure to the underlying asset, in this case Bitcoin, whereas a Futures ETF allows investors to speculate on the price of the asset. Policymakers have said in the past that cryptocurrencies are too prone to fraud and manipulation to be approved for ETFs backed by actual Bitcoins.
Regardless, the fact that cryptocurrencies are being integrated into the SEC’s framework was enough to boost Bitcoin and many other currencies. Ethereum, which is the most widely used cryptocurrency, is up 13% from a week ago. Its price stands at $3,847, close to its all-time high of $4,168 on May 11.
Bitcoin’s price began to explode last September, shooting from just under $12,000 at the beginning of the month to over $60,000 by April. A wave of bad news, including Elon Musk reneging on his blanket support of Bitcoin and a crackdown on cryptocurrency services in China, caused the price to drop significantly in May. In July, Bitcoin briefly fell below $30,000.