In recent weeks, Bitcoin’s price has seen a robust surge, attributed in part to the possibility of the United States greenlighting a widely anticipated type of cryptocurrency trading vehicle that could further normalize the digital asset. Since the end of August, Bitcoin has witnessed a remarkable 30-percent surge, primarily driven by speculation surrounding the potential approval of an exchange-traded fund (ETF) specifically designed to track Bitcoin’s price.
A spot Bitcoin ETF, if approved, would provide a more accessible avenue for the general public to invest in cryptocurrency without the need to directly purchase Bitcoin. According to Charles Morris, founder of crypto analyst group ByteTree, it’s now a matter of “when, not if” the approval happens.
With a market capitalization of around $670 billion, Bitcoin remains the largest cryptocurrency globally and has doubled in value since the start of the year. While Bitcoin briefly surpassed $35,000 last week, it still lags behind its record high of nearly $69,000 reached in late 2020.
Clara Medalie of cryptocurrency data analysts Kaiko suggests that the recent rebound in Bitcoin’s price is predominantly linked to the anticipation surrounding the potential approval of a Spot Bitcoin ETF.
Larry Fink, CEO of BlackRock, noted that part of the rally can be attributed to factors beyond mere speculation. He mentioned it’s also “about a flight to quality, with all the issues around the Israeli war now, global terrorism.”
A recent federal appeals court decision in Washington upheld a ruling in favor of asset manager Grayscale against the US Securities and Exchange Commission (SEC), which had initially rejected its Bitcoin ETF proposal. The SEC is now re-evaluating Grayscale’s application as well as considering Bitcoin ETF requests from other financial groups, including BlackRock and Ark Invest.
Analysts like Charles Morris believe that SEC approval could trigger a gradual move toward Bitcoin trades, much like the impact of the approval of a gold ETF in the early 2000s.
Despite the ongoing debate and decision-making process related to Bitcoin ETFs, the current surge in Bitcoin’s price is a positive development for the cryptocurrency sector, which has faced numerous challenges, including bankruptcies and scandals, in recent years. Additionally, attention remains focused on the court trial of former crypto tycoon Sam Bankman-Fried, charged with several counts of fraud, embezzlement, and criminal conspiracy.
As the cryptocurrency market continues to evolve and attract more mainstream attention, developments in Bitcoin ETFs hold the potential to further legitimize digital assets in the eyes of traditional investors and regulators. This pivotal moment in Bitcoin’s journey may set the stage for broader acceptance and adoption in the financial world.
Shayne Heffernan
