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By Harry Wise

Updated: 11:57 EST, 10 November 2023

Bitcoin has more than doubled in value in 2023 after aturbulent ride over the past few years.

Having reached a record high price of $69,000 in late 2021, the cryptocurrency's value subsequently plunged by over three-quarters in the following 12 months.

But bitcoin has soared by around 121 per cent to beyond $37,000 in 2023, despite high-profile examples of financial crime in the cryptocurrency world, and concerns about its environmental impact and utility.

Turbulence: Having reached a record high price of $69,000 in late 2021, bitcoin's value plunged the following year. But during 2023, it has more than doubled its price

There have been four major spikes in the digital currency's value since the year began, with the first happening during mid-to-late January when a group of large investors - known as 'whales' - bought bitcoin in significant quantities.

That coincided with markets predicting interest rates would start to go down after central banks hiked them continuously the previous year to try and reduce inflation.

Bitcoin surged again in March as the collapse of Silicon Valley Bank triggered major turmoil throughout the American and European banking systems, with Credit Suisse having to be rescued by rival UBS.

The uncertainty saw more retail investors decide to plough their money into perceived safer havens, including gold and larger cryptocurrencies like Bitcoin and Ethereum.

By the end of March, bitcoin had risen to about $28,500, 71 per cent higher than at the beginning of the year.

Over the next three months, the currency enjoyed a couple of mini-bumps before trending downwards, partly due to Chinese regulators banning financial institutions from supporting Bitcoin.

Surging value: Bitcoin has soared by around 121 per cent to beyond $37,000 in 2023

Yet it shot up in mid-June when BlackRock, the world's largest asset manager, filed an application with the US Securities and Exchange Commission to launch a spot bitcoin exchange-traded fund.

Unlike a future-based ETF, a spot-bitcoin ETF is an investment vehicle that directly owns some bitcoins through which investors have exposure without actually having to hold them.

The SEC has been reluctant to sanction such funds under the chairmanship of Gary Gensler, partly due to bitcoin's volatility and its widespread use by fraudsters.

But in October, it decided not to contest a court decision saying the watchdog was wrong to turn down an application by Grayscale Investments to convert its crypto fund into an ETF.

That set off bitcoin's fourth and final big rally in 2023. It has now climbed by more than a third in the past month.

Soon after the SEC chose not to appeal, BlackRock's iShares ETF turned up on the website of clearing house Depository Trust & Clearing Corporation before being taken down just hours later, then reappearing soon afterwards.

The BlackRock ETF is one of 12 that the SEC could approve in a 'window' lasting until 17 November, according to Bloomberg ETF analysts James Seyffart and Eric Balchunas.

Ahead of this, investors have been putting money into alternative cryptoassets, such as ethereum, BNB and dogecoin, further uplifting Bitcoin's prices.

If any spot bitcoin ETFs get the thumbs up, this could send bitcoin's price further skyrocketing as pension funds, retail, and institutional investors are more likely to invest in cryptocurrency.

Should none get accepted, Seyffart and Balchunas have said 'there's a 90 per cent chance' of one being approved before 10 January.

WHAT IS BITCOIN?

You'll often hear it described as a cryptocurrency, which isn't very enlightening. In simple terms, it is virtual money, with no physical notes or coins. It was invented by someone claiming to be called Satoshi Nakamoto and to be Japanese, but their real identity is unknown. Bitcoin, like other cryptocurrencies, has become associated with illicit activity due to the anonymity of buyers and sellers. But bitcoin has for many, including both institutions and individuals, become an investment asset.

HOW DOES IT WORK?

Bitcoins are stored in a digital wallet on smartphones or computers. Transactions are recorded on Blockchain, the 'decentralised' online ledger behind the currency. You can in theory use bitcoin to pay for goods and services, though they are not accepted everywhere. Or you can buy it in the hope of a profit.

WHERE CAN YOU BUY IT?

Anyone with access to a computer or smartphone can buy bitcoin through an exchange. You will have to pay trading fees on top of the cost of the bitcoin itself.

WHAT IS IT WORTH?

Bitcoin is not backed by any tangible asset or underlying commodity such as gold, so it has no intrinsic value. It is 'worth' what people are prepared to pay and that has been volatile, although in recent years, it has settled somewhat.

Today, it is hovering around $30,000. A year ago, it was at $23,400, two years ago $31,000 and in July 2020, $9,180. In July 2019, the price was at $10,500, 2018 $7,500 and in 2017 $2,250. A decade ago, one bitcoin was worth $90.

SHOULD I BUY?

It depends on whether you believe bitcoin will rise in value. It's a huge risk. City watchdog the FCA recently reminded savers that they should be prepared to lose all the money they put into bitcoin, so only invest cash you can afford to lose. If things do go wrong, dealings in bitcoin are largely outside the regulators' safety nets.

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Why is the price of bitcoin up so much this year? - This is Money