Bitcoin achieved a significant milestone, surging to a 21-month high of $45,168.6 on Tuesday, fueled by heightened speculation that the U.S. Securities and Exchange Commission (SEC) was nearing approval of a spot exchange-traded fund (ETF) for the cryptocurrency.
The 6% increase marked the highest level for Bitcoin since early April 2022, reflecting a continuation of its remarkable recovery in 2023, during which it soared over 100% in value from its starting point of around $17,000.
The recent uptick in Bitcoin’s value has been primarily driven by speculation surrounding the potential approval of a U.S. ETF directly tracking the cryptocurrency’s prices. The SEC faces a January 10 deadline to approve or reject a spot ETF application from Ark and 21 Shares, according to a Reuters report. This decision could set a precedent for similar ETF applications from various fund managers.
The SEC is expected to inform other applicants this week about the status of their product launches by January 10. Notably, BlackRock Inc, the world’s largest asset manager, has also submitted an application for a spot Bitcoin ETF.
The SEC has previously rejected spot Bitcoin ETF applications, expressing concerns about the token’s decentralized and volatile nature potentially hindering fund managers’ ability to protect investors against market manipulation. Presently, all U.S.-traded Bitcoin ETFs track the token’s futures traded on the Chicago Mercantile Exchange.
Grayscale, the operator of the GBTC ETF, has sought to convert its product into a spot ETF, securing a legal victory against the SEC’s repeated rejections. This victory prompted the regulator to reconsider Grayscale’s application.
While proponents believe that spot ETF approval could attract substantial capital inflows into Bitcoin, some analysts remain cautious, pointing to the crypto industry’s recent challenges, including high-profile bankruptcies and regulatory crackdowns, which have impacted retail interest. Despite the recovery in 2023, trading volumes remain lower than those seen during the 2021 bull run, and high-interest rates have constrained capital inflows into the crypto market.