24-10-2023 (SINGAPORE) Cryptocurrencies experienced notable gains during Asian trading hours on Tuesday, with Bitcoin surging to its highest level in nearly 18 months amid increasing speculation that an exchange-traded bitcoin fund (ETF) is on the horizon.
In an impressive rally, Bitcoin recorded a gain of more than 6 percent, reaching a price of $35,198. This marks the highest value for the leading cryptocurrency since May 2022. The surge on Monday, which amounted to a 10 percent increase, was the most substantial daily gain in nearly a year. Impressively, Bitcoin’s price has already doubled in 2023.
This surge in Bitcoin’s value had a positive impact on crypto-linked shares, such as Coinbase Global and MicroStrategy, both of which experienced a rise in after-hours trading. Meanwhile, Ethereum, the second-largest cryptocurrency by market capitalization, managed to break above the $1,800 threshold.
The driving force behind this renewed optimism in the cryptocurrency market is the anticipation of the launch of an exchange-traded fund (ETF) that would enable fund investors to hold Bitcoin. Such an ETF is viewed as a significant catalyst for increasing demand for Bitcoin because it provides an accessible means for those who are cautious about trading in crypto markets to gain exposure to Bitcoin through traditional stock markets.
Notably, several major investment firms, including BlackRock, have pending applications for Bitcoin ETFs in the United States. Recent developments have fueled speculation regarding the likely approval of these applications, particularly after BlackRock’s iShares ETF was listed on the website of the Depository Trust & Clearing Corporation (DTCC).
This anticipation was further bolstered by reports earlier this month, including from Reuters, which suggested that the U.S. Securities and Exchange Commission (SEC) was not planning to appeal a court ruling that it had been incorrect in rejecting an ETF application from Grayscale Investments.
Steen Jakobsen, Chief Investment Officer at Saxo, expressed the view that the value of any asset is fundamentally tied to the number of people using it. He noted, “So, the ETF would make a large audience and increase liquidity.”
However, it remains uncertain when and why the iShares ETF was added to the DTCC list. Both DTCC and BlackRock have yet to respond to requests for comment via phone and email. It is worth noting that last week, BlackRock dismissed an inaccurate report claiming that its ETF had been approved. Sources close to the SEC confirmed that the application was still pending.
In the last 24 hours, data from the Coinglass crypto derivatives analysis site indicated a significant amount of short-covering activity related to Bitcoin.
This surge in cryptocurrency values is also occurring amid broader market concerns about the potential for Israel’s conflict with the Islamist group Hamas to escalate into a wider regional conflict. Furthermore, political developments, such as Javier Milei emerging as the frontrunner for the presidency of Argentina, may have contributed to the increased demand for Bitcoin, which has occasionally served as a store of wealth during times of crisis, as noted by Kyle Rodda, an analyst at Capital.com.
