In a remarkable turn of events, Bitcoin price has shattered the $34,000 barrier, marking its highest value since May of the previous year.
This surge is underpinned by a wave of positivity surrounding the potential introduction of a Bitcoin exchange-traded fund (ETF).
The soaring rally of Bitcoin price
As per data from Coin Metrics, the world’s leading cryptocurrency is currently trading at $34,596.40, reflecting an impressive 4.97% increase. Notably, Ether, the second-largest digital coin, has also experienced a surge, reaching its highest value since August.
Analysts attribute this surge to a monumental $167 million in short liquidations, primarily on offshore exchanges. Ryan Rasmussen, an analyst at Bitwise Asset Management, highlights this as the driving force behind what is now being referred to as the ‘god candle’.
The ETF factor
The anticipation of a Bitcoin ETF gained momentum following a court ruling in favor of crypto-focused asset manager Grayscale against the U.S. Securities and Exchange Commission. This ruling pertains to Grayscale’s ambitious plan to transform its substantial Grayscale Bitcoin Trust (GBTC) into an ETF. The SEC’s decision not to contest this ruling within a crucial timeframe has ignited hopes that a Bitcoin-related ETF may secure approval in the coming months.
Potential benefits of a Bitcoin ETF
If approved, a Bitcoin ETF would present investors with an avenue to participate in Bitcoin price movements without the need to possess the cryptocurrency directly. This is particularly significant given Bitcoin’s reputation as a highly volatile asset, characterized by unpredictable price fluctuations.
Institutional backing
Notable financial institutions including BlackRock, Invesco, Fidelity, and Grayscale have been actively advocating for Bitcoin ETFs. These institutions have submitted applications to offer such assets, positioning them as comparatively safer investment choices when compared to direct crypto investments, which are renowned for their speculative nature and price volatility.
Confidence in approval
Coinbase has expressed confidence in the eventual approval of a U.S. Bitcoin exchange-traded fund by the U.S. SEC. This sentiment underscores the industry’s collective optimism surrounding this potential development.
The crypto industry is keeping a close eye on these developments, as they hold the promise of a significant resurgence. Over the past year, the sector has weathered its fair share of controversies, including FTX’s bankruptcy and legal troubles involving Terraform and its CEO, Do Kwon.
A rollercoaster ride
The trajectory of the Bitcoin price has been nothing short of a rollercoaster. From reaching an all-time high of over $65,000 in November 2021, it witnessed a precipitous drop to around $16,000 in the same month the following year. This decline coincided with the collapse and subsequent bankruptcy filing of Sam Bankman-Fried’s crypto exchange, FTX.
The SEC’s heightened scrutiny of crypto firms, with Coinbase and Ripple at the center of legal battles, highlights the regulatory challenges faced by the industry. These firms, along with others in the crypto space, have criticized the U.S. for the lack of clarity surrounding crypto regulations and have even hinted at the possibility of relocating in response to the SEC’s crackdown.
Meanwhile, if you wish to read more and catch up about the Ripple’s legal victory against the SEC, make sure to check out our article on it: SEC waves white flag and Ripple executives emerge triumphant.
Featured image credit: André François McKenzie on Unsplash
