Bitcoin Price Briefly Surges Past $35,000 Thanks To Tailwinds Led By ETF Enthusiasm!

Key Takeaways:

• Bitcoin Price Resurges to $35,000: Bitcoin recently soared to levels last seen in 2022, briefly breaching the $35,000 mark, driven by optimism surrounding potential ETF approvals.
• ETF Speculation Continues: Expectations of the first U.S. spot Bitcoin ETF approval are driving the market. Major players like BlackRock and Fidelity are racing to offer such products.
• SEC Resistance Softening: The US Securities and Exchange Commission (SEC) has been cautious about Bitcoin ETFs, citing risks, but recent developments suggest it may reconsider.
• Crypto Market Reacts: Ether and smaller cryptos, including BNB and Dogecoin, experienced price surges alongside BTC price but later stabilized.
• Mixed Signals for Bitcoin: While Bitcoin price has rebounded, it remains below its 2021 peak, impacted by rising interest rates and changing correlations with traditional assets.

Bitcoin price recently witnessed a resurgence, breaking the $35,000 barrier, a level it hasn’t seen since 2022. The surge was driven by growing expectations of increased demand due to the potential approval of exchange-traded funds (ETFs) related to Bitcoin.

This rise in the largest digital asset reached as high as 11.5%, briefly surpassing $35,000 before settling at $33,517 by 11:43 a.m. in New York on Tuesday. Bitcoin’s year-to-date rebound from the digital asset slump in 2022 stands at an impressive 102%.

BTC/USD | Source: TradingView

ETFs Fueling Speculation

The impending approval of the first US spot Bitcoin ETFs has fueled heightened enthusiasm for the king coin. Major asset management firms, including BlackRock Inc. and Fidelity Investments, are actively pursuing these ETF offerings. Proponents of digital assets believe that ETFs could significantly expand crypto adoption.

In addition to this, a US federal appeals court recently ruled in favor of Grayscale Investments LLC, enabling them to proceed with the creation of a spot Bitcoin ETF, despite objections from the US Securities and Exchange Commission (SEC).

The SEC has, until now, been hesitant to permit ETFs to directly invest in Bitcoin, citing concerns about risks such as fraud and market manipulation. However, the recent court ruling and a surge in applications from prominent investment firms to launch spot funds have led to speculations that the SEC may eventually relent.

Read More: Bitcoin Price Prediction

ETF Developments and Speculation

Notably, Bloomberg Intelligence ETF analyst Eric Balchunas pointed out on social media that the iShares Bitcoin Trust, listed as IBTC, appeared on the Depository Trust and Clearing Corp. (DTCC) platform. While the listing was eventually taken down, this incident fueled excitement and speculation about the impending ETF developments.

BlackRock, one of the world’s largest asset managers, operates the iShares business. DTCC is responsible for clearing and settlement activities in U.S. markets.

Last week, Bitcoin price experienced a 10% intraday surge driven by ETF speculation. However, during that episode, a mistaken report regarding BlackRock receiving approval to launch an ETF caused the surge, which subsequently cooled down once the error was rectified.

Market Reactions and SEC Oversight

In response to the recent surge in BTC price surge, the second-largest crypto, Ether, also witnessed an upswing of up to 8.5%, briefly surpassing the $1,800 mark. Smaller cryptos like BNB, XRP, and the meme-favorite Dogecoin initially experienced significant gains before stabilizing.

Data from Coinglass revealed that roughly $387 million worth of crypto trading positions, primarily from speculators betting on price declines, were liquidated in the past 24 hours.

While the SEC has approved ETFs holding Bitcoin and Ether futures, the agency has taken a more stringent stance on cryptos after last year’s market crash and notable events such as the bankruptcy of the FTX exchange, leading to a trial for fraud involving the co-founder Sam Bankman-Fried.

Bloomberg Intelligence analysts have indicated that the approval of a spot Bitcoin ETF seems inevitable, and a series of funds are likely to receive the green light, even though the exact timing remains uncertain.

Despite its recent upsurge, Bitcoin remains below its 2021 peak of nearly $69,000, largely impacted by rising interest rates, which have reduced demand for riskier assets. Moreover, Bitcoin price correlations with traditional assets like stocks, bonds, and gold have declined in recent times, leading to questions about whether mainstream investors are pulling back from the market.

Additional Read: Should you Invest in BTC before Bitcoin Halving Event in 2024?

Source: Hindustan Times / Bloomberg