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Bitcoin has risen above $60,000 for the first time in more than two years, with a rapid rise putting the world's largest cryptocurrency within striking distance of all-time highs.
Bitcoin rose as much as 12.6 percent to $63,968 on Wednesday, before retreating to about $60,000. The rise has brought its gains to 42 percent in the first two months of this year.
The meteoric rise has revived memories of the cryptocurrency bull market that pushed the token to its record peak of around $69,000 in November 2021, as investors pile in amid “fear of missing out” for further price rises.
“This is crazy,” Timo Lehes, co-founder of blockchain firm Swarm, said, adding that he expects more money to flow into the token.
“When people see these types of increases in a short period of time…then people get attracted and FOMO gets involved,” he said.
In January, US regulators approved the launch of Bitcoin exchange-traded spot funds by major asset managers including BlackRock and Invesco, paving the way for an influx of new money from investors looking to speculate on the cryptocurrency through a regulated vehicle. The 11 funds now hold 303,000 bitcoins, according to K33 Research, worth $18 billion and equivalent to about 1.5 percent of the total bitcoin supply.
“We could see an all-time high break any day now,” said Simon Peters, an analyst at trading firm eToro. “The driving force behind this is without a doubt [bitcoin funds]”.
The rise in the price of Bitcoin comes amid a broader rise in traditional financial markets. Chipmaker Nvidia's impressive results fueled investor frenzy over the potential of artificial intelligence technology, helping push US and European stocks to all-time highs last week.
Cryptocurrency trading platform Coinbase blamed traffic that was 10 times normal for disruptions for some users, including a zero balance appearing on their accounts.
“We appreciate your patience,” Coinbase said. “We are starting to see an improvement in customer trading. Due to increased traffic, some customers may still see errors in logging in, sending, receiving and in some payment methods. Rest assured that your funds are safe.”
The price of Bitcoin rose despite a crackdown by US regulators on the largest cryptocurrency companies and continuing doubts about the token. Last week, European Central Bank officials criticized the cryptocurrency, saying that “the fair value of Bitcoin remains zero.”
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“For society, Bitcoin’s renewed boom-and-bust cycle presents a dire prospect. The collateral damage would be enormous,” they wrote, adding that the token’s price “is no indicator of its sustainability.”
The cryptocurrency industry has been buoyed by the belief that it is moving beyond the scandals of recent years. The Securities and Exchange Commission slapped Binance, the world's largest cryptocurrency exchange, with a record $4.3 billion fine in November for crimes including failing to protect against money laundering and breaching international sanctions.
Binance's competitor, FTX, collapsed in 2022 and its founder, Sam Bankman-Fried, was convicted of seven counts of fraud and money laundering. This week, his legal team called for the former cryptocurrency mogul to serve just a few years in prison, rather than the 100-year sentence he could face.
