Bitcoin Wins Boost on Hope of Broader Trading
London (AFP) – Bitcoin’s price has experienced a significant increase in recent weeks, as the United States considers allowing a popular type of trading in the cryptocurrency, which would normalize its use and accessibility.
The price of bitcoin has risen by 30% since the end of August due to speculation surrounding the potential creation of an exchange-traded fund (ETF) for the cryptocurrency. This ETF would directly track the price of bitcoin and enable more individuals to invest in the cryptocurrency without having to purchase it directly.
Charles Morris, founder of crypto analyst group ByteTree, stated, “Approval is now a matter of when, not if,” indicating the growing possibility of the ETF being approved.
With a market capitalization of around $670 billion, bitcoin is the largest cryptocurrency globally and has doubled in value since the beginning of the year.
Last week, bitcoin briefly reached $35,000, receiving additional support from investors considering it a safe haven amid economic and geopolitical uncertainties. However, it remains at around half its all-time high value of nearly $69,000, which was achieved in late 2020.
Clara Medalie, an analyst at cryptocurrency data firm Kaiko, mentioned that the recent rebound in bitcoin’s price seems to be linked to the enthusiasm surrounding the potential approval of the Spot bitcoin ETF.
According to Larry Fink, CEO of BlackRock, the rally in bitcoin’s price goes beyond mere rumors and can be attributed to a flight to quality, particularly amidst the Israeli war and global terrorism issues.
In a recent decision, a federal appeals court in Washington upheld its ruling in favor of asset manager Grayscale against the US Securities and Exchange Commission (SEC), which had initially rejected its bitcoin ETF authorization. The SEC is now reassessing the application and reviewing other bitcoin ETF requests from financial groups like BlackRock and Ark Invest.
It is expected that the SEC’s first decision regarding Ark Invest’s bitcoin ETF will be made by January 10, 2022, at the latest.
Charles Morris predicts that SEC approval will initiate a gradual shift towards bitcoin trades, similar to how the approval of a gold ETF at the beginning of the millennium triggered increased demand for gold investments.
Companies applying for a bitcoin ETF are also contributing to the cryptocurrency’s price surge since they are required to hold a certain level of bitcoins before the fund’s launch, according to Michael van de Poppe, founder of the MN Trading platform.
Felix Hartmann, managing partner at Hartmann Capital, believes that the current situation positions bitcoin as a legitimate and trustworthy asset, moving it away from being an esoteric asset class.
Apart from bitcoin, analysts speculate that other cryptocurrencies, such as ether, could eventually have their own Spot ETFs.
Sui Chung, CEO of CF Benchmarks, expects the SEC to approve multiple bitcoin ETFs simultaneously in the future, as the applications follow a similar structure. This could potentially pave the way for ETFs tracking other cryptocurrencies.
While awaiting the SEC’s decision on exchange-traded funds, the price recovery of bitcoin is seen as a positive development for the overall cryptocurrency sector, which has encountered bankruptcies and scandals in recent years.
Moreover, all eyes are currently on the ongoing court trial of former crypto tycoon Sam Bankman-Fried, who faces charges of fraud, embezzlement, and criminal conspiracy. Bankman-Fried’s FTX empire experienced a downfall after a rapid rise that made the platform the world’s second-largest crypto exchange, transforming Bankman-Fried into a billionaire sensation in the tech world.