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Bitcoin hits $35,000 for first time since 2022 on ETF Optimism

October 24, 2023
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In a surge driven by mounting expectations of fresh demand from exchange-traded funds (ETFs), Bitcoin achieved its highest price since May of the previous year. The largest digital asset experienced an 11.5% increase, briefly crossing the $35,000 mark, and was trading at $34,800 by 10:31 a.m. in Singapore on Tuesday. This jump contributed to a year-to-date rebound of over 100% since the 2022 digital-asset downturn.

The prospect of the first U.S. spot Bitcoin ETFs gaining approval in the coming weeks has ignited speculative fervor for the cryptocurrency. Asset management giants BlackRock Inc. and Fidelity Investments are among the contenders to offer such products, with digital-asset enthusiasts arguing that ETFs would foster wider adoption of the cryptocurrency.

A U.S. federal appeals court also recently affirmed a victory for Grayscale Investments LLC in its pursuit of a spot Bitcoin ETF, despite objections from the U.S. Securities and Exchange Commission (SEC). The SEC has been reluctant to permit ETFs directly investing in Bitcoin, expressing concerns about risks like fraud and manipulation in the underlying market. However, the applications from major investment firms have led to speculation that the agency might reconsider its stance.

Eric Balchunas, an ETF analyst at Bloomberg Intelligence, noted on social media platform X (formerly known as Twitter) that the iShares Bitcoin Trust has been listed on the Depository Trust and Clearing Corp. (DTCC) with the ticker “$IBTC.” BlackRock, the world’s largest asset manager, operates the iShares business, and the DTCC handles clearing and settlement in U.S. markets. Balchunas cautioned that this listing doesn’t indicate technical approval but is a significant step toward ETF launch.

Bitcoin previously surged 10% amid ETF anticipation, although a false report about BlackRock’s approval to launch a fund caused a brief spike that later subsided. Meanwhile, Ether, the second-largest cryptocurrency, rose above $1,800 as Bitcoin gained momentum, though other digital assets had mixed performance, with Solana and Dogecoin erasing initial gains.

The SEC has permitted ETFs holding Bitcoin and Ether futures, but it has been increasing its scrutiny of the crypto industry following market upheavals, such as the FTX exchange’s bankruptcy. Bloomberg Intelligence analysts predict the “inevitable” approval of a spot Bitcoin ETF, with a batch of funds likely to receive the green light, though the timing remains uncertain.

While Bitcoin has yet to reach its pandemic-era peak of nearly $69,000 in 2021, it faces pressure from rising interest rates affecting demand for riskier assets. The correlations between Bitcoin and other assets like stocks, bonds, and gold have recently diminished, raising questions about mainstream investor engagement.

Justin d’Anethan, Head of Business Development in the Asia Pacific at crypto market maker Keyrock, commented on improved liquidity, though not to the level of the 2020-2021 euphoria.

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