Bitcoin maintained its position near its highest level since March 2022 on Thursday, following the approval of the first U.S.-listed exchange-traded funds (ETFs) to track the cryptocurrency by U.S. regulators. This significant development has the potential to broaden Bitcoin’s appeal to a wider range of investors.
The Securities and Exchange Commission (SEC) granted approval on Wednesday for 11 applications, including those from prominent entities like BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck. As of 0930 GMT on Thursday, three of the ETFs, including BlackRock’s, were already trading, with more expected to commence trading later in the day.
Bitcoin’s price was holding steady around $46,250, representing a 0.6% increase for the day. This stability came after Bitcoin had gained momentum earlier in the week in anticipation of the SEC’s approval.
The world’s largest cryptocurrency has witnessed a nearly 9% increase in value so far this year, reaching $47,915 on Tuesday, its highest level since March 2022. This surge comes after Bitcoin more than doubled in price last year, marking a recovery period following a tumultuous 2022 for the crypto industry, which saw several major companies, including the trading platform FTX, collapse.
Marion Laboure, a senior strategist at Deutsche Bank Research, explained the essence of a spot Bitcoin ETF, emphasizing that it offers standardized access to the digital asset as an investment without altering the fundamental nature of Bitcoin. She noted that while the ETF approval marks a significant milestone for Bitcoin prices, volatility is expected to persist, and the long-term impact on the crypto ecosystem and financial system remains uncertain.
Spot Bitcoin ETFs were already available in other markets, such as Canada and Europe, but they had not attracted substantial investor interest. However, industry participants are optimistic that the introduction of U.S.-listed ETFs will drive greater demand for Bitcoin, providing both retail and institutional investors with a more accessible means of exposure to the cryptocurrency without relying on futures trading or self-custody.
Nick Ruck, COO of ContentFi Labs, a blockchain firm focused on IP licensing, highlighted that Bitcoin’s supply is fixed. Therefore, if the ETFs require more Bitcoin to meet demand, they will need to purchase it in the market.
Attention within the industry is now shifting to the second-largest cryptocurrency, Ether, which serves as the foundation for the Ethereum blockchain network. BlackRock filed for a spot Ethereum ETF in November 2023. On Thursday, Ether’s price surged as much as 4.4% to reach $2,638, its highest level since May 2022.
Geoff Kendrick, head of digital asset research at Standard Chartered, noted that with the confirmation of Bitcoin ETFs, market focus is rapidly transitioning to Ethereum, with expectations that an Ethereum ETF will also be approved given the positive momentum in the crypto market.
