Bitcoin's Surge to 21-Month High Amid Speculations on U.S. Bitcoin ETF Approval

Bitcoin’s 21-Month High: Surges above $47,000 as anticipation builds for the approval of a U.S. Bitcoin ETF.
Institutional Interest Soars: Major firms like BlackRock, Fidelity, and Invesco vie for Bitcoin ETF launch, signalling mainstream adoption.

Bitcoin made a remarkable leap, soaring to a 21-month high at the beginning of the week as investors eagerly awaited the potential approval of a U.S. bitcoin exchange-traded fund (ETF) in the upcoming days.

As per Coin Metrics, the cryptocurrency rallied by over 6%, reaching $46,924.38 on Monday. This surge came as prominent entities like BlackRock and Grayscale, among others, finalized crucial updates to their applications submitted to the U.S. Securities and Exchange Commission (SEC). These updates included essential fee disclosures, significantly boosting investor confidence in the likelihood of approval.

At its peak, Bitcoin surged to $47,238.92, marking the first time it had crossed the $47,000 mark since April 2022. According to Jim Angel, an associate professor specializing in financial market structure at Georgetown University’s McDonough School of Business, the situation is akin to a “price war.” Multiple entities are introducing nearly identical products, vying for dominance primarily through competitive pricing strategies.

The SEC faces a pivotal deadline to decide on the Ark 21Shares ETF application by Wednesday. Expectations are high that the agency will approve multiple applications simultaneously, aiming to level the playing field.

Former SEC chair Jay Clayton expressed strong conviction regarding the approval, stating on CNBC’s “Squawk Box” that “Approval is inevitable.” He emphasized that there are no significant decisions pending and highlighted the significance of this move, not only for Bitcoin but for the finance sector at large.

The potential approval of a spot Bitcoin ETF carries significant weight in the cryptocurrency industry. Originating with anti-establishment roots, the industry has since showcased the value of cryptocurrencies like Bitcoin and Ether to institutional investors. Notably, firms such as Fidelity, Invesco, VanEck, WisdomTree, Franklin Templeton, and BlackRock are actively pursuing the launch of Bitcoin ETFs.

Bitcoin’s upward surge coincided with a decline in bond yields, with the 10-year Treasury note losing nearly 4 basis points on Monday. This optimism surrounding Bitcoin’s ETF prospects has also led to a 4% increase in Ether’s value. Many of the firms vying for a Bitcoin ETF have also filed applications for spot Ether ETFs, with the SEC’s deadline for these applications slated for later in the year.

Institutional Interest and Market Impact

The market response to Bitcoin’s surge extended to crypto equities, with Coinbase, Riot Platforms, Marathon Digital, Iris Energy, and CleanSpark among the beneficiaries. Investors anticipate the ETF’s approval to pave the way for institutional inflows into Bitcoin, potentially reshaping the landscape of the cryptocurrency market.

Galaxy Digital, collaborating with Invesco for its proposed Bitcoin ETF, estimates the potential market size of a U.S. Bitcoin ETF to be approximately $14 trillion in the first year post-launch, projecting significant growth in subsequent years.