When on October 31 of 2008 a computer programmer, with the pseudonym Satoshi Nakamoto, was presenting his creation bitcoin as a “new electronic cash system” that would be based on the blockchain method, it could hardly imagine the exponential growth of its capitalization in the coming years.

Bitcoin paved the way for the creation of many other cryptocurrencies or digital currencies, which are not controlled by central banks, with their total capitalization reaching the high level of 3 trillion. dollars in 2021. At that time it had peaked, amid a pandemic and high liquidity that investors had from the fiscal support measures of governments in the US and elsewhere, frenzy for the purchase cryptowith the price of bitcoin soaring in November of that year to close to $69,000.

The environment for the cryptocurrency industry worsened then, when the US central bank (Fed) stopped bond purchases and then turned to a tight monetary policy to tackle inflation, with continuous interest rate hikes since March 2022. THE price of bitcoin and other digital currencies took off strongly downturnwhich was boosted by a series of scandals that hit the industry during 2022, culminating in the collapse of major cryptocurrency exchange FTX towards the end of the year and the conviction of its founder, Sam Bankman-Fried, for fraud.

THE capitalization of the crypto industry shrunk in 2022 close to 1 trillion. dollars, a third from the previous year’s high, a development that once again highlighted the huge swings in digital currency prices relative to those of other assets.

In 2022, the price of bitcoin experienced a free fall close to $15,000i.e. the largest cryptocurrency had lost almost 80% of its value from the high level of November 2021. At the time there were many who believed that bitcoin would enter a period of permanent depreciation under the weight of scandals and measures taken by regulators in the US and other countries to regulate the industry.

This, however, did not happen, but instead bitcoin did rebounded strongly last yearwith its price moving above the 45,000 dollars – last week it briefly approached $49,000 – marking an increase of over 160%. Bitcoin had already gained a wider base in recent years, with large institutional investors, such as banks and funds mainly in the US, placing significant capital.

This fact gave a relevant “legalization” in bitcoin and at the same time perhaps explains the support it found to recover. By her decision US Securities and Exchange Commission (SEC) last Wednesday to approves listing and trading on major stock markets – New York Stock Exchange, Nasdaq and Chicago Derivatives Exchange – 11 investment funds (ETFs) based on the current (spot) price of bitcoin, the legalization for crypto has become absolute.

SEC Chairman Gary Gensler accompanied the approval of ETFs by noting that it does not mean the SEC endorses and supports bitcoin, which he said presents myriad risks for investors. However, the bottom line is that the acquisition of bitcoin has now become a lot easier for small investorswho will be able to buy shares in the approved ETFs – managed by large firms such as BlackRock – instead of going through the difficult process of buying bitcoins directly which also has increased risks for them.

Given that ETFs track the current price of bitcoin, the investor could participate in profits from its rise or losses from its fall, without having to buy the cryptocurrency directly.

In addition, bitcoin ETFs will now be able to be purchased by institutional investors, such as pension funds, something the SEC official expressed concern about.

Various predictions about how much the price of bitcoin will rise have already started to be made after the SEC decision, but this remains to be seen in practice as well as to what extent there will be new interest from investors, given the wide fluctuations in its price. .