Bitcoin Surges 11% to 17-Month High Amid Spot ETF Hopes
Bitcoin Rises Amid Speculation of Spot ETF Approval
Bitcoin, the world’s largest cryptocurrency, experienced a significant surge on Tuesday, fueled by growing speculation that the U.S. Securities and Exchange Commission (SEC) was nearing approval of a spot exchange-traded fund (ETF).
The cryptocurrency rallied by 11% to reach $33,433.8, marking its highest level since May 2022. It also surpassed the $30,000 threshold for the first time since July.
Ethereum, the second-largest cryptocurrency, also witnessed a nearly 7% increase.
Grayscale Emerges Victorious in Legal Battle
A legal battle between the SEC and digital assets firm Grayscale concluded in favor of the latter on Monday. The D.C. Circuit Court of Appeals ruled that the agency had wrongfully rejected Grayscale’s ETF application, which aimed to directly track the price of Bitcoin.
Furthermore, media reports indicated that Blackrock’s spot Bitcoin ETF application was progressing closer to approval. The iShares Bitcoin Trust appeared to have been listed on the website of the Depository Trust and Clearing Corporation.
Although these developments did not provide definitive confirmation of a spot Bitcoin ETF approval, they generated optimism for a potential green light later this year. Such approval is expected to attract more institutional investors to the crypto market, which has experienced significant depletion.
Federal Reserve’s Monetary Policy and Crypto Markets
Recent weakness in the U.S. dollar also played a role in aiding the crypto markets, as speculation grew that the Federal Reserve would refrain from further interest rate hikes this year.
Several prominent entities, including BlackRock Inc, Grayscale, Ark Ventures, and VanEck, have submitted applications for a spot Bitcoin ETF in the United States. The SEC has previously rejected multiple applications, with Grayscale’s proposal leading to a lawsuit that ultimately favored the digital assets firm.
Spot Bitcoin ETF and Its Potential Impact
A spot Bitcoin ETF has the potential to inject much-needed capital into the crypto market, which has been grappling with a severe lack of liquidity following a price crash and several high-profile bankruptcies over the past year.
Bitcoin volumes have dwindled to multi-year lows, as retail interest in crypto waned due to fraud allegations and the operation of unlicensed exchanges by major players like Binance and Coinbase Global Inc (NASDAQ:).
By attracting more investors and increasing liquidity, a spot Bitcoin ETF could revitalize the crypto market and pave the way for its resurgence.
