© Reuters
Investing.com– Bitcoin rose sharply to hit 21-month highs on Tuesday amid growing speculation that the U.S. Securities and Exchange Commission was close to approving a spot exchange-traded fund for the cryptocurrency biggest in the world.
rose 6% to $45,168.6 at 21:35 ET (02:35 GMT), reaching its highest level since early April 2022. But trading volumes remained thin due to the New Year holidays.
Bitcoin’s gains came as an extension of a stellar rally in 2023, where the token’s value rose more than 100% after starting the year at around $17,000.
The cryptocurrency’s recent gains were primarily driven by speculation over the approval of a US ETF that directly tracks the token’s prices. The SEC has a Jan. 10 deadline to approve or reject a spot ETF application from Ark and 21 Shares, according to a Reuters report. The ruling could set a precedent for ETF applications by several other fund managers for a similar product.
The Reuters report also said that the SEC will notify other applicants as soon as this week if they have been authorized to launch their products before January 10.
BlackRock Inc (NYSE:), the world’s largest asset manager, has also filed for a spot bitcoin ETF.
The SEC has repeatedly rejected applications for a spot bitcoin ETF over the past two years, citing concerns that the decentralized and volatile nature of the token will prevent fund managers from protecting investors against market manipulation. Currently, all U.S.-traded bitcoin ETFs track the token’s futures, which trade on the Chicago Mercantile Exchange.
Grayscale, which currently operates the GBTC ETF (OTC 🙂 regulator will reconsider Grayscale’s request.
Cryptocurrency advocates argue that the approval of a spot ETF will trigger a flood of capital inflows into bitcoin, as the product allows traders to invest in the token without directly holding the cryptocurrency.
But analysts have warned that the approval may not trigger as big a bull run as expected, especially given that the crypto industry is still grappling with a massive loss of faith over the past two years.
A series of high-profile bankruptcies, along with a regulatory crackdown on the world’s largest crypto companies, greatly affected retail interest in cryptocurrencies. This caused bitcoin to fall to $15,000 by the end of 2022.
While ETF approval hopes fueled a strong rally for the token through 2023, trading volumes remained at a fraction of those seen during the 2021 bull run. High interest rates also limited the amount of capital flowing into cryptocurrencies.
