Bitcoin (BTC-USD) rose above $37,000 on Thursday morning, hitting its highest price in 18 months, a rally fueled by more optimism that regulators could soon approve the first spot Bitcoin exchange-traded fund.
As of 12 p.m. ET, it had fallen below $37,000 but was still up nearly 3% in the last 24 hours.
The world’s largest cryptocurrency has now gained more than 32% in the past month and 120% since the beginning of January.
“There is no doubt that the very positive performance in Bitcoin this year continues to be very impressive,” wrote Matt Maley, chief market strategist at Miller Tabak + Co., in a note Thursday morning.
However, it is still a long way from an all-time high. Bitcoin peaked at $68,789 in November 2021, but then crashed in 2022 as the Federal Reserve began raising interest rates and a number of companies imploded, including crypto exchange FTX in November 2022.
A comprehensive crackdown on the crypto industry followed. Regulators sued a number of big players, including Coinbase and Binance, and last week a jury convicted FTX founder Sam Bankman-Fried of defrauding customers, lenders and investors.
FTX founder Sam Bankman-Fried. (` Photo/Bebeto Matthews, File) (ASSOCIATED PRESS)
Now investors are renewed optimism that the industry is poised for greater mainstream acceptance. They hope the Securities and Exchange Commission will soon give approval to a spot Bitcoin ETF that would allow investors to get into the cryptocurrency without having to own it.
BlackRock (BLK) is one of the well-known asset managers that recently applied to launch such a product.
BlackRock is the world’s largest asset manager. (STRF/STAR MAX/IPx) (STRF/STAR MAX/IPx)
Grayscale Investments wants the SEC to approve converting its Bitcoin trust into a spot Bitcoin exchange-traded fund after a three-judge panel of the District of Columbia Court of Appeals ruled in its favor in August.
The panel concluded that the SEC acted “arbitrarily and capriciously” when it rejected Grayscale’s conversion application in 2022.
Grayscale has since begun discussions with the SEC’s markets and trading and corporate finance departments, according to a person familiar with the matter.
The story goes on
The next official milestone at which the SEC must accept or reject approval for a spot Bitcoin ETF is January 10th. However, the SEC could approve applications sooner.
“Any point in time is entirely speculative,” this person added.
Bitcoin’s rise on Thursday also sent shares of digital asset companies higher. Coinbase (COIN), the largest US crypto exchange, rose 8%, while MicroStrategy (MSTR) gained 7%. Meanwhile, Marathon Digital (MARA) rose 11%.
Crypto stocks had given back some of their gains by midday.
Bitcoin appears to be “very overbought,” Maley said, suggesting a decline could soon occur. However, the midweek advance did not bring the loss of momentum seen in previous rallies this year, he added.
“This is the kind of breakout movement that often leads to even greater progress soon,” Maley said.
Of course, Bitcoin and the crypto markets are heavily driven by derivatives trading, and that can exaggerate market activity in both directions.
In the last 24 hours, crypto trading volume has doubled to $87 billion by midday New York time. According to crypto derivatives source Coinglass, $132 million in traders’ positions shorting Bitcoin were liquidated during the same period.
The size of overall short liquidations is far smaller than in the past so-called short squeeze rallies that Bitcoin has experienced this year, suggesting that more investors are buying the underlying/spot asset directly.
David Hollerith is a senior reporter at Yahoo Finance, covering banking, crypto and other financial areas.
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