Bitcoin, the world’s largest cryptocurrency by market value, has surged to a two-month high of over $30,000, amid growing expectations that the US Securities and Exchange Commission (SEC) will soon approve the first Bitcoin exchange-traded fund (ETF).
An ETF is a type of investment vehicle that tracks the performance of an underlying asset, such as a stock, a commodity, or a cryptocurrency. An ETF allows investors to gain exposure to the asset without having to buy or store it directly. A Bitcoin ETF would make it easier and cheaper for institutional and retail investors to access the cryptocurrency market.
The SEC has been reluctant to approve a Bitcoin ETF, citing concerns over market manipulation, fraud, and lack of regulation. However, recent developments have raised hopes that the regulator may finally change its stance.
One of these developments is the expected court mandate on Friday that could make effective an August opinion that went in favor of Grayscale Investments LLC, which had sued the SEC as it looked to convert its Bitcoin trust (GBTC) into an ETF. GBTC is currently the largest publicly traded Bitcoin fund in the US, with over $40 billion in assets under management1. However, GBTC trades at a significant discount to its net asset value, meaning that investors are paying less than the actual value of the Bitcoin held by the fund. This is partly due to the high fees and lack of liquidity associated with GBTC. Converting GBTC into an ETF would reduce these frictions and potentially eliminate the discount.
Another development is the SEC’s retreat from a lawsuit against two Ripple Labs executives, which had accused them of selling more than $1 billion worth of XRP tokens without registering them as securities. The SEC asked a federal judge on Thursday to dismiss the case, ending a legal battle that had cast a shadow over the crypto industry2. The move was seen as a positive sign that the SEC may soon clarify its regulatory approach to cryptoassets and recognize their legitimacy.
These factors have boosted the sentiment in the crypto market, which has been recovering from a sharp sell-off in May and June that saw Bitcoin drop below $30,000. The cryptocurrency has now regained some of its lost ground, breaking above several key resistance levels and attracting more buyers.
According to some analysts, Bitcoin could soon test its all-time high of around $32,000, which it reached in April this year3. However, others caution that the cryptocurrency still faces significant challenges, such as regulatory uncertainty, environmental concerns, and competition from other digital assets.
Bitcoin is currently trading at $30,797 as of 7:30 a.m. in New York, up 5.2% in the last 24 hours4. Its market capitalization stands at $578 billion, accounting for 50% of the total crypto market value.