Tuesday saw a 6% increase in bitcoin to $35,198, the highest level in almost a year and a half due to growing rumors that an exchange-traded fund is on the horizon.
That came after a 10% spike on Monday, when bitcoin had its greatest day in nearly a year. The optimism that followed extended to linked stocks and the larger crypto market.
Demand is expected to increase if the U.S. Securities and Exchange Commission (SEC) approves an exchange-traded fund (ETF) that holds bitcoin on behalf of fund investors.
The idea goes that a spot bitcoin ETF would bring in a fresh round of capital to the industry by giving investors who were previously hesitant about cryptocurrencies access to the commodity through the stock market.
“The value of … any asset, basically, is the amount of people using it,” said Steen Jakobsen, CIO at Saxo. “So the ETF would make a large audience and increase liquidity.”
The price of the erratic asset bitcoin, which has already doubled this year, was up 3.2% at $34,129 as of late. Ether, the second-biggest cryptocurrency, reached its highest level since August.
After-hours trading saw gains for stocks related to cryptocurrencies, including those of owner MicroStrategy (MSTR.O) and leading U.S. exchange Coinbase Global (COIN.O).
Prominent U.S. financial organizations that have applications for bitcoin exchange-traded funds pending include investment behemoth BlackRock (BLK.N).
The DTCC clearing house website featured BlackRock’s iShares ETF, which fueled speculation about its impending acceptance. The iShares ETF was added to the DTCC list, although it was not made clear when or why. Requests for comments were not immediately answered by BlackRock or the DTCC.
The SEC won’t appeal a court decision that said it was incorrect to reject an ETF application from cryptocurrency company Grayscale Investments, according to reports this month, including ones from Reuters, added to the anticipation.
According to Geoffrey Kendrick, head of digital assets research at Standard Chartered, “the SEC being pressured by the courts increases the probability” of an ETF permission.
BlackRock refuted an inaccurate report last week claiming that the ETF had received approval.
Information on the website for crypto derivatives analysis Coinglass revealed significant short-covering of bitcoin on the previous day.
