Bitcoin held steady near 21-month highs as U.S. regulators granted approval for spot bitcoin exchange-traded funds (ETFs). The Securities and Exchange Commission (SEC) announced on Wednesday that it had approved 11 applications for spot bitcoin ETFs, including offerings from BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck.
The majority of these ETFs are set to commence trading on Thursday, with the iShares bitcoin ETF garnering strong demand in premarket trading, surpassing even the trading volumes of Apple, the world’s most valuable company.
Bitcoin’s current trading price is around $47,133, reflecting a 2.6% increase on the day and inching back towards Tuesday’s 21-month high just below $48,000, which was reached in anticipation of the SEC‘s approval. Bitcoin saw more than a doubling in price last year, recovering from the turbulence of 2022 when several major companies in the crypto industry collapsed, notably FTX.
Simultaneously, ether, the native token of the Ethereum blockchain network, rose by 5% to $2,653.8, marking its highest level since May 2022. Traders and analysts are now speculating on the possibility of ETFs tracking ether receiving approval following the success of their bitcoin counterparts.
“The market’s now quickly moving on to ETH, saying if bitcoin is done, then it’s now very highly likely that the ETH one will get done as well,” commented Geoff Kendrick, Head of Digital Asset Research at Standard Chartered.
Several firms, including BlackRock in November 2023, have filed applications for spot Ethereum ETFs. Market participants assert that U.S.-listed spot crypto ETFs could drive increased demand for the underlying digital tokens, providing investors with standardized access without resorting to futures trading or self custody.
While spot bitcoin ETFs were already available in other markets like Canada and Europe, opinions on their potential impact vary. JPMorgan analysts expressed skepticism, noting limited investor interest in similar products in other regions. Marion Laboure, Senior Strategist at Deutsche Bank Research, emphasized that a spot bitcoin ETF offers standardized access without altering bitcoin’s core proposition, cautioning that only time will reveal the potential transformational outcomes for the crypto ecosystem and financial system.
UBS analysts remain unconvinced of the structural case for the industry, and there are concerns that increased institutional investment in crypto could leave mainstream finance vulnerable to future collapses. The head of the International Monetary Fund warned in December that widespread adoption of crypto assets could undermine macro-financial stability. The market is expected to remain volatile as these developments unfold.
