Bitcoin Hits 17-Month Peak as BlackRock Rumored to Launch ETF

Bitcoin has surged to its highest level in 17 months, driven by speculation that BlackRock, the world’s largest asset manager, may soon launch a spot Bitcoin exchange-traded fund (ETF). 

A recent filing by BlackRock indicates that the firm plans to provide initial funding to its iShares Bitcoin Trust, suggesting an imminent launch of the fund. 

This news, combined with the ETF being listed on the Depository Trust & Clearing Corporation, has generated excitement in the market, resulting in a 15% increase in Bitcoin’s value within 24 hours. Other top cryptocurrencies have also experienced gains of 5% to 8% during the same period.

The approval of a spot Bitcoin ETF would be significant as it would directly invest in Bitcoin, affecting its supply and potentially driving scarcity. 

While the US Securities and Exchange Commission (SEC) has previously approved futures-based Bitcoin ETFs, these products do not directly invest in Bitcoin. 

The progress towards the launch of the iShares Bitcoin Trust has helped the overall crypto market recover from a downtrend, with the combined market cap approaching its year-to-date high.

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Last week, a false tweet claiming that BlackRock’s ETF had received regulatory approval caused a temporary spike in Bitcoin’s price. However, the gains were quickly reversed when BlackRock denied the claim. 

Analysts at JPMorgan predict that the SEC will approve the iShares Bitcoin Trust by January 10, along with other pending applications. 

The recent decision by the SEC not to appeal a court ruling allowing Grayscale to convert its Bitcoin Trust into an ETF suggests that the approval of a spot Bitcoin ETF is likely on the horizon.

Traders are also reacting to this news by narrowing the price difference between Bitcoin and shares in Grayscale’s Bitcoin Trust, which currently trades at an 11% discount relative to Bitcoin. 

SEC Commissioner Hester Pierce has expressed frustration with the agency’s delay in approving a Bitcoin ETF, stating that she has advocated for approval for the past five years. 

Industry experts agree that the SEC’s stance on Bitcoin and other cryptocurrencies has been inadequate.

Institutional investors eagerly anticipate the approval of a spot Bitcoin exchange-traded fund (ETF), as it is predicted to drive a substantial increase in demand for Bitcoin. 

According to Paul Brody, the global blockchain leader at Ernst & Young (EY), there is a significant amount of pent-up demand from institutions, as regulators in the US have yet to approve a spot Bitcoin ETF for several years. 

Brody believes that once a BTC ETF is approved, trillions of dollars from institutional investors will likely flow into the Bitcoin market. However, these institutional funds are currently unable to invest in Bitcoin unless it is through an ETF or other regulated activities. 

The US Securities and Exchange Commission (SEC) is closely watched by global investors, as it has not yet approved a single spot Bitcoin ETF. 

Companies such as Grayscale Investments, ARK Investment, BlackRock, and Fidelity have submitted applications for multiple Bitcoin ETF products and are awaiting a response from the SEC. 

The recent amendment to the spot Bitcoin ETF by ARK Invest and 21Shares is seen as a positive development by ETF analyst Eric Balchunas, indicating progress and potential future approvals. It is believed that these amendments were made in response to concerns raised by the SEC. 

Overall, there is high anticipation for approving a spot Bitcoin ETF, expected to unlock significant demand from institutional investors.