Bitcoin pricings have been firing on all cylinders since the beginning of 2017, which drove it past the $1,100 mark on February 21, 2017 – the highest in more than three years. Notably, its value beat the $900 mark in late December for the first time since February 2014. In mid-2015, the currency was at around $200 (read: Explaining Bitcoin and Crypto Currency).
We are yet to have an ETF on this cryptocurrency. Winklevoss Bitcoin Trust has filed for one to make it easy for investors to bet on this soaring digital currency. The reason behind this surge is supposed to be investors’ wagers on an approval of Winklevoss Bitcoin Trust ETF (Pending:COIN) by the SEC. The fund is expected to hit the market in March 2017, if it receives a go-ahead from the SEC
What is Bitcoin?
Bitcoins are ‘mined’ by using a greater amount of computer processing power. However, since there is a fixed amount of bitcoins, as the limit is reached, it becomes hard to ‘mine’ for the coins. The best part of this system is that it is beyond the reach of central banks.
What’s Behind the Popularity?
As per CNBC, “bitcoin is a very volatile asset” but doesn’t have a strong correlation with other asset classes. Bourgeoning trading volumes in China, bitcoin’s largest market, has favored the price. As Chinese investors wanted to shield their portfolio from a depreciating yuan, they bet big on bitcoin, driving the currency to double in 2016.
Moreover, trading volumes in China have been solid with the government taking proactive measures against illegal money transfer. As per an article published on CNBC, Bitcoin is emerging as a safe haven asset like gold. The SPDR Gold Trust ETF (NYSEARCA:GLD) rallied considerably in the first half of 2016.
As per an analyst, “the cryptocurrency could be referred to as digital gold, as it shares many of the characteristics that makes the precious metal a great store of value.” As a result, in 2016, when Chinese shares witnessed a tumultuous run, bitcoin prices scaled higher. India’s demonetization in November 2016 also gave a boost to bitcoin trading volumes. The currency is also being fast accepted by big corporate houses.