Tuesday saw a nearly 10% increase in bitcoin to $34,872, the highest level in almost a year and a half due to growing rumours that an exchange-traded fund is on the verge of being launched.

That came after a 10% spike on Monday, when bitcoin had its greatest day in nearly a year. The optimism that followed extended to linked stocks and the larger crypto market.

Demand is expected to increase if the U.S. Securities and Exchange Commission (SEC) approves an exchange-traded fund (ETF) that holds bitcoin on behalf of fund investors.

According to the reasoning, a spot bitcoin ETF would bring in fresh investment into the space by giving formerly hesitant investors access to cryptocurrency through the stock market.

The price of the erratic asset, bitcoin, has doubled so far this year. It just increased by 7.87% to $34,020, its highest point since May 2022. During Asian trading hours, it was trading above $35,000. Ether, the second-largest cryptocurrency, reached a high of $1,786.30, up 4.50% from August.

Shares of well-known US exchange Coinbase Global and bitcoin owner MicroStrategy, which are tied to cryptocurrencies, increased by more than 7% and 12%, respectively.

“A sense of excitement has erupted in the crypto market and now it’s just a case of waiting to see if and when something concrete emerges from the SEC,” Antoni Trenchev, co-founder of digital asset firm Nexo, said in an emailed statement.

Prominent U.S. financial organisations that have applications for bitcoin exchange-traded funds pending include investment behemoth BlackRock.

The DTCC clearing house website featured BlackRock’s iShares ETF, which fueled speculation about its impending acceptance. The iShares ETF was added to the DTCC list, although it was not made clear when or why. Requests for comments were not immediately answered by BlackRock or the DTCC.

The SEC won’t appeal a court decision that determined the agency was incorrect to deny an ETF application from cryptocurrency company Grayscale Investments, according to reports this month, including ones from Reuters, added to the anticipation. Formally announcing its decision on Monday, the court returned the application to the SEC for further examination.

“The SEC being pressured by the courts increases the probability” of an ETF approval, said Standard Chartered’s head of digital assets research Geoffrey Kendrick.

Information on the website for crypto derivatives analysis Coinglass revealed significant short-covering of bitcoin on the previous day.

(Adapted from MoneyControl.com)

Categories: Economy & Finance, Regulations & Legal, Strategy, Uncategorized