Bitcoin price reaches new record high of over $66,000

The price of bitcoin hit record highs today  after the launch of the first ever bitcoin futures exchange-traded fund in the US overnight.

Bitcoin is hovering around the $66,000 mark at present, ahead of its previous all-time high of $64,800 reached in April and more than double its level in July.  In pound sterling terms, bitcoin is now trading at around £47,815.

The ProShares Bitcoin Strategy ETF, touted by some as a major milestone for the cryptocurrency industry, is trading under the ‘BITO’ ticker on Wall Street and jumped nearly 5 per cent to $41.94 in its first session.

Unlike mutual funds, which are traded once a day, ETFs can be exchanged throughout the day’s trading session, potentially making them a more popular option for some everyday investors. 

As with anything linked to crypto, however, there has been a mixed reaction among experts to the launch of the US bitcoin futures ETF.

Andrey Dobrynin, co-founder and managing director of InvestEngine, said that while the chance to buy into bitcoin futures would ‘undoubtedly turn the heads of many investors’, the potential risks involved still needed to be carefully evaluated. 

Mr Dobrynin said: ‘As with all investments – investors should invest at a level or knowledge and risk that they are comfortable with. 

‘Whilst ETFs traditionally provide excellent diversification and convenient access to markets – there are always things to consider such as the track record of product providers, replication methods and, in this case, the performance of the underlying futures contracts. 

‘Without forgetting the fact that bitcoin remains largely an unregulated asset class which is still establishing itself on its use.’

He added: ‘We’d urge investors to carefully consider whether this investment is suitable for them and for investment platforms to provide the tools and education that support their investors in making informed investment decisions.’

Jodie Gunzberg, managing director of CoinDesk told This is Money: ‘Many will think they are getting bitcoin but they are not. 

‘The problem is they are getting futures, which are contracts that expire so, to stay invested, investors need to sell expiring contracts for later-dated ones. If the price of bitcoin is expected to rise in the future, then the later-dated contracts are more expensive. 

‘When investors sell the cheaper expiring contracts for the more expensive ones, they lose money.’

Simon Peters, an analyst at investment platform eToro, said: ‘Proshare’s bitcoin futures ETF went live on the NYSE yesterday, and whilst it’s not an ETF holding the underlying asset that many in the crypto community want to see, it’s still a step forward in the right direction.

‘We may not see a wave of investment straight away – naturally there will be some scepticism around a new product. Also, as there are more bitcoin futures ETF applications pending, investors may patiently wait to see which ETF could be best for them going forward.

‘Nevertheless, a bitcoin futures ETF now provides a convenient way for investors to get exposure to the bitcoin price movement. 

‘A word of warning, however, investors who plan to hold for the longer term would need to take into account ‘hidden fees’ within the futures ETF, as contracts will have to roll every month and this could erode potential gains.’

Freddie Evans, a sales trader at UK-based digital asset broker GlobalBlock, said: ‘Bitcoin has been given renewed impetus from the commencement of trading of a US SEC regulated bitcoin ETF, which yesterday saw the second-highest ETF ever in opening day volume. 

‘It closed on Tuesday evening with around $950million in shares traded.’ 

Antony Portno, founder of Traders of Crypto, said: ‘Bitcoin ETFs are essentially trading something that mimics bitcoin but without trading the actual coin itself, this allows investors to buy into the coin without trading the bitcoin asset. 

‘It allows investors to invest in the coin without having the issues of storage and complicated security issues.

‘The approval of a bitcoin ETF undoubtedly further boosts the credibility of Bitcoin as a global investment. 

‘However, being based on futures it will not directly increase the demand for bitcoin itself and indeed there is a real possibility that the launch could be bearish for bitcoin in the short term like what happened in 2017 when bitcoin futures were listed on the Chicago Mercantile Exchange.

‘Overall these events, like China banning bitcoin are mere temporary blips on the bitcoin market where demand is increasing every year, and supply is limited.’

The UK’s finance watchdog, the Financial Conduct Authority, opted to ban the sale of crypto-derivatives, including exchange-traded products, to retail investors from January 2021. 

Having started 2021 at around $30,000, the world’s biggest cryptocurrency has surged over 60 per cent since mid-September, gaining more than 46 per cent in October alone.

Other major cryptocurrencies like ethereum and XRP have also rallied higher in the past month. 

This week’s bitcoin futures ETF is expected to be followed by three other bitcoin ETFs this month, with some anticipating other cryptocurrencies to follow.