In a remarkable surge, Bitcoin’s price catapulted by nearly 10% on Tuesday, reaching $34,872, a level unseen for nearly a year and a half. This meteoric rise in the world’s most famous cryptocurrency has been fueled by growing anticipation that an exchange-traded bitcoin fund (ETF) may soon become a reality.
Monday witnessed a similar surge of 10%, marking Bitcoin’s best single-day performance in almost a year. This bullish momentum has spilled over into the broader cryptocurrency market, generating enthusiasm among investors and influencing related stocks.
The driving force behind this surge is the mounting speculation that the U.S. Securities and Exchange Commission (SEC) is inching closer to approving a bitcoin ETF. Such a development is expected to trigger substantial demand, potentially reshaping the cryptocurrency landscape.
The ETF Potential
The prevailing argument in favor of a spot bitcoin ETF is that it would grant cautious investors access to the cryptocurrency through the stock market, paving the way for a new wave of capital to flow into the digital asset sector. A stamp of approval from the SEC for such an ETF could be a pivotal moment for the cryptocurrency world.
Bitcoin, renowned for its volatility, has witnessed its price doubling since the beginning of this year. Currently, it is trading at $34,020, a 7.87% increase, marking the highest level since May 2022. During Asian trading hours, it even breached the $35,000 mark. The second-largest cryptocurrency, Ethereum (ether), also experienced a surge, climbing by 4.50% to $1,786.30, reaching its highest value since August.
This bullish momentum extended to cryptocurrency-related stocks as well. Coinbase Global, a prominent U.S. exchange, and MicroStrategy, a notable holder of bitcoin, observed gains of more than 7% and 12%, respectively.
A Sense of Excitement in the Crypto Market
Antoni Trenchev, the co-founder of digital asset firm Nexo, aptly described the current sentiment in the crypto market as “a sense of excitement.” The anticipation of an imminent ETF approval has energized investors and industry experts alike. However, it now hinges on when, rather than if, the SEC will make a concrete announcement.
Major financial players like BlackRock are among those with pending applications for bitcoin ETFs. Speculation about their approval gained momentum when BlackRock’s iShares ETF was listed on the clearing house DTCC’s website. It remains unclear when and why this listing occurred, as both DTCC and BlackRock refrained from immediate comments.
Further fueling the optimism surrounding ETFs was the recent news that the SEC would not appeal a court ruling that found the agency had erred in rejecting an ETF application from crypto firm Grayscale Investments. The court’s formalization of this decision on Monday sent the application back to the SEC for a fresh review.
Standard Chartered’s head of digital assets research, Geoffrey Kendrick, highlighted that “the SEC being pressured by the courts increases the probability” of an ETF approval.
Short-Covering Surge
Data from the crypto derivatives analysis site Coinglass has shown a significant surge in short-covering activity in Bitcoin over the last 24 hours. This indicates that traders who had bet on Bitcoin’s price falling are now rushing to buy it back, further contributing to the cryptocurrency’s rapid ascent.
In conclusion, Bitcoin’s recent surge to an 18-month high is a testament to the growing anticipation of an ETF approval. The crypto market is brimming with excitement, with investors and experts closely watching for developments from the SEC. While uncertainties remain, this surge underscores the enduring allure and potential of cryptocurrencies in the financial world.
