Bitcoin surges to 17-month high on ETF speculation and regulatory wins

Bitcoin is on a relentless rally, surging 11.5% to breach $35,000, its highest point since May last year. This surge is fuelled by anticipation of forthcoming demand from exchange-traded funds (ETFs). US approval for Bitcoin ETFs is imminent, with major players like BlackRock and Fidelity in the race. A recent federal court victory for Grayscale Investments added to the ETF hype. Despite regulatory challenges, the market is abuzz with optimism, and the iShares Bitcoin Trust inches closer to being a reality. This enthusiasm, coupled with a 105% year-to-date rebound, propels Bitcoin towards broader adoption.

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Bitcoin Hits $35,000 for First Time Since 2022 on ETF Optimism

By Muyao Shen and Olga Kharif

Bitcoin extended a rally fueled by expectations of fresh demand from exchange-traded funds, reaching the highest price since May last year.

The largest digital asset rose as much as 11.5% to top $35,000 before paring some of the gain to trade at $33,918 as of 7:25 a.m. in London on Tuesday, taking its year-to-date rebound from 2022’s digital-asset rout to 105%.

The possible approval in coming weeks of the first US spot Bitcoin ETFs is stoking speculative ardor for the token. Asset managers BlackRock Inc. and Fidelity Investments are among those in the race to offer such products. Digital-asset bulls argue the ETFs would widen adoption of the cryptocurrency.

A US federal appeals court on Monday also formalized a victory for Grayscale Investments LLC in its bid to create a spot Bitcoin ETF over objections from the US Securities and Exchange Commission.

The SEC has so far resisted allowing ETFs that invest directly in Bitcoin, citing risks such as fraud and manipulation in the underlying market. The court ruling and flurry of applications from investment heavyweights to start spot funds stoked speculation that the agency will relent.

ETF Ticker

Bloomberg Intelligence ETF analyst Eric Balchunas flagged on X, the platform formerly known as Twitter, that the iShares Bitcoin Trust “has been listed on the DTCC” with the ticker IBTC. 

BlackRock, the world’s largest asset manager, operates the iShares business. The DTCC is the Depository Trust and Clearing Corp., which undertakes clearing and settlement in US markets.

The iShares Bitcoin Trust has been listed on the DTCC (Depository Trust & Clearing Corporation, which clears NASDAQ trades). And the ticker will be $IBTC. Again all part of the process of bringing ETF to market.. h/t @martypartymusic pic.twitter.com/8PQP3h2yW0

Eric Balchunas (@EricBalchunas) October 23, 2023

“This doesn’t mean it’s technically approved,” Balchunas said in an interview. “It’s not home free. But this is pretty much checking every box that you need to check before you launch an ETF. When we see a ticker added, those things are usually right before launch.”

Bitcoin also surged 10% intraday at the start of last week on ETF hype. On that occasion, an erroneous report that BlackRock had won approval to launch a fund caused the move and the rally cooled once the mistake came to light.

Ether, the second-largest token, jumped 6% to exceed $1,800 in Bitcoin’s slipstream on Tuesday. Smaller coins such as BNB, XRP and meme-crowd favorite Dogecoin initially climbed sharply before moderating.

Coinglass data shows that about $387 million worth of crypto trading positions, mostly from speculators who were betting on lower prices, were liquidated in the past 24 hours.

SEC Clampdown

The SEC has already allowed ETFs that hold Bitcoin and Ether futures. But the agency overall has intensified a crypto crackdown following last year’s market crash and blowups like the bankruptcy of the FTX exchange, whose co-founder Sam Bankman-Fried is on trial for fraud.

Bloomberg Intelligence analysts Elliott Stein and James Seyffart have said “approval of a spot Bitcoin ETF looks inevitable” and that a batch of funds is likely to be given the green light, though the timing remains uncertain.

Bitcoin remains below its pandemic-era, 2021 peak of almost $69,000, squeezed by rising interest rates that hit demand for risky assets. The token’s correlations with assets such as stocks, bonds and gold have ebbed lately, stoking questions about whether mainstream investors have disengaged.

“Liquidity is somewhat better than before,” said Justin d’Anethan, head of business development in the Asia Pacific at crypto market maker Keyrock. “Prices have now recuperated and with it a certain amount of liquidity — still nothing compared to the euphoria of 2020-2021, though.”

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© 2023 Bloomberg L.P.