According to Bloomberg, as investors waited for authorities to decide whether to allow the US’s first exchange-traded fund directly linked to the currency, Bitcoin traded just below $47,000.
The biggest cryptocurrency in the world experienced a sudden surge beyond $47,000 late on Monday, driven by enthusiasm over multiple documents disclosing the fees prospective ETF issuers intended to charge for their products should they receive approval. As of 11:49 a.m. in New York, the price of bitcoin had dropped by less than 1% to $46,816. Since the year’s beginning, it has increased by around 12%, and on Monday, it hit a peak of more than 21 months.
The US Securities and Exchange Commission is expected to make a decision on some Bitcoin ETF applications on Wednesday, with spectators anticipating a slew of rulings to avoid awarding a first-mover advantage. Bitwise emerged from the pack on Monday as offering the cheapest fee for its planned ETF at 0.24% after an introductory no-fee period, while Grayscale’s planned Bitcoin Trust was the most expensive at 1.5%. Bitwise cut the fee to 20 basis points on Tuesday.
Several issuers, including BlackRock Inc. and VanEck, filed amended S-1 forms for their ETFs early Tuesday morning, responding to comments and feedback made by the SEC on some applications on Monday.
Bitcoin’s price has seen bouts of strong volatility since the start of the year, prompted by speculation around the proposed investment products. “We’re in for a massive week with one of the most significant events in crypto history taking place, the potential approval of a Bitcoin spot ETF,” eToro market analyst Simon Peters said in a note.
Standard Chartered suggested this week that Bitcoin could climb to $200,000 by the end of 2025 on ETF approvals, citing the example of gold exchange-traded products. The firm expects investor inflows of $50 billion to $100 billion into Bitcoin ETFs this year.
Meanwhile, monthly options volume for Bitcoin last month reached $29.9 billion, its highest level since late 2021, according to a post by blockchain data analytics platform Kaiko on Tuesday. Options trading has seen “significant volume since October as traders are positioning for higher volatility ahead,” Kaiko’s Dessislava Aubert said in an email, with highs persisting through the end of 2023.
It’s not a given that SEC approval would immediately lead to a spike in Bitcoin’s price, Peters said, with recent hikes indicating that many may have bought ahead of the event.
“We could have a ‘sell-the-news’ situation and the price could spike lower, but I think this would only be short term,” he added in an email on Tuesday. “Or we could have a flurry of buying activity as retail traders try to front run the future inflows from institutional investors via this approved ETF.
Shares of so-called crypto companies were mostly lower. Coinbase Global, the largest US crypto exchange fell about 3.6%, while Bitcoin miners Marathon Digital and Riot Platforms were marginally negative. MicroStrategy, the software maker which has served as a proxy for many equity investors who want expose to Bitcoin, fell about 3.3%.