Bitcoin is surging in value. The cryptocurrency reached an all-time high on 21 October, just days after a new Bitcoin exchange-traded fund (ETF) launched on the New York Stock Exchange.
So how has Bitcoin performed this year? And how does the Bitcoin ETF work? Here’s what you need to know.
How has Bitcoin performed so far this year?
On 21 October, the value of a single Bitcoin hit $66,687 (£56,234). This is the highest the cryptocurrency has been ever valued at, beating its previous record of $63,237 (£45,878) set in April 2021.
Despite Bitcoin’s new price, it’s fair to say that the value of the world’s most popular cryptocurrency has been volatile in 2021, to say the least!
At the turn of 2021, Bitcoin’s price stood at a tad under $30,000 (£21,763), rising steadily to $33,500 (£24,302) by February. However, within a month, the cryptocurrency’s value had surged to just under $50,000 (£36,237) as ‘Bitcoin mania’ once again took off. By Mid-April, Bitcoin’s value had risen to over $60,000 (£43,577), peaking at $63,237 (£45,878).
However, the next three months were rather less rosy for Bitcoin. By mid-July, the value of a coin had plummeted to under $29,789 (£21,612) – less than half of April’s record-high.
August was a better month for Bitcoin holders (or ‘HODLers’), with its value almost hitting $50,000 (£36,275). Despite this ‘recovery’ Bitcoin’s value fell again in September, reaching a low of $40,879 (£29,657).
Fast-forward to the current month, and many were expecting a Bitcoin crash following a move by China to crack down on the cryptocurrency. Despite these predictions, Bitcoin’s value has rocketed over the past few weeks, reaching its all-time high time of $66,687 on Thursday.
How does the new Bitcoin ETF work?
On 19 October, the ProShares Bitcoin Strategy ETF launched in the United States (NYSE ticker: BITO). While similar ETFs already exist in other countries, this is the first of its kind to launch on the world’s largest stock exchange.
According to ProShares, its new bitcoin-linked ETF will offer investors an opportunity to ‘gain exposure to Bitcoin returns in a convenient, liquid and transparent way’. The company also says its new offering will seek to ‘provide capital appreciation primarily through managed exposure to bitcoin futures contracts’.
According to ProShares CEO, Michael L. Sapir, the new ETF will also mean investors can now get involved in Bitcoin more easily.
He explains, “BITO will open up exposure to Bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider and creating a Bitcoin wallet or are concerned that these providers may be unregulated and subject to security risks.”
It’s worth knowing that Proshare’s ETF focuses on Bitcoin’s futures price, so its value won’t necessarily align with Bitcoin’s ‘spot’ price. Also, the fund does not directly invest in Bitcoin.
Is a Bitcoin ETF available in the UK?
There is currently no cryptocurrency-linked ETF in the UK. That’s because the Financial Conduct Authority (FCA) has not authorised these types of funds in Britain.
Last year, the FCA took the step of banning the sale of crypto-derivatives to retail consumers due to the ‘harm they pose’.
Accompanying this decision, the regulator said it had concerns with the ‘inherent nature of the underlying assets’ of cryptocurrency. In other words, the FCA feels cryptocurrencies have ‘no reliable basis for valuation’.
To learn more about Bitcoin and other digital coins, see the Motley Fool’s guide to cryptocurrency.
The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
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About the author
Karl is a writer specialising in investing and personal finance content. He regularly contributes articles on savings, bank accounts, mortgages, and loans. He was previously a Personal Finance Writer for MoneySavingExpert.
Investing in Cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in Cryptocurrency. Should you decide to invest in Cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.
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