Bitcoin Hits New All-Time High. What Does This Mean for Investors?

What's driving Bitcoin's price up?

The world's leading cryptocurrency has just hit a new all-time high, taking it above the $65,000 mark for the first time. At time of writing, Bitcoin (BTC) is trading at $66,525 according to CoinMarketCap data.

Similarly, the overall cryptocurrency market cap which peaked at $2.53 trillion in May, reached a new high of $2.64 trillion today.

Why is Bitcoin soaring?

The main driver behind the jump in prices is the launch of the first ever Bitcoin exchange-traded fund (ETF) on the New York Stock Exchange. Leading crypto industry players have been pushing for a crypto ETF for years, and a successful debut yesterday has sent crypto prices to new highs.

The ProShares Bitcoin Strategy ETF tracks Bitcoin futures -- not actual Bitcoin. Futures are a type of financial derivative. They are essentially an agreement to buy or sell an asset (in this case Bitcoin) at a set point in the future. You don't actually own the asset itself.

What's important about the fund is that it gives non-crypto investors a way to get exposure to Bitcoin without having to open a separate cryptocurrency exchange account.

However, if you're considering investing in the ETF, make sure you fully understand how futures investing works. It isn't the same as buying Bitcoin directly, and the price of the ETF won't always follow the price of Bitcoin.

What it means for investors

If you invest for the long term, Bitcoin's latest all-time high should mean as little to you as any other market fluctuation: not much. The advantage of buy-and-hold investing is that you don't have to stress about trading when a price is particularly high or low because you're working on a much longer time frame.

Cryptocurrency's volatility means there will be days when the market soars and days when it plumbs new depths. If you did your research and had a clear investment strategy from the outset, these price changes shouldn't change your long-term position or strategy.

That said, some active investors may see this as a good time to take profits, while others may hold on in the belief that Bitcoin will continue to rise. In contrast to buy-and-hold investments, the advantage of active trading is that investors can benefit from market volatility and potentially profit from new highs.

Overall, the launch of a Bitcoin ETF is another big step toward mainstream cryptocurrency adoption, and it's good for the crypto industry as a whole. It helps to build institutional investor confidence and may open the door to new retail investors. According to The Ascent's research, over 50 million Americans plan to buy cryptocurrency in the next year -- and an ETF may help them take that step.

The cryptocurrency industry has made some significant leaps since Bitcoin first launched in 2009. But it has a long way to go and a number of technical challenges to solve. As such, there are still many opportunities and risks for crypto investors.

Be ready for regulatory headwinds

Increased regulation remains a big known-unknown for the coming months in the cryptocurrency market. Lawmakers in Washington are expected to announce proposals for a stricter regulatory framework around the crypto industry very soon. But we don't yet know how heavy-handed that regulation will be.

We know there are no moves to ban cryptocurrency in the U.S. as China has done. And we know that stablecoins (cryptos whose value is pegged to another commodity like the U.S. dollar) will see stronger controls. As a result, investors who are enjoying the bull run need to be prepared. There's a chance changes in regulation will take the wind out of crypto's sails.