Bitcoin, the notoriously volatile cryptocurrency, has witnessed an astonishing resurgence, breaking the $35,000 barrier for the first time since May 2022. Over the past five days, Bitcoin has soared by an impressive 20%.
This meteoric rise in the cryptocurrency’s value is primarily attributed to the growing excitement surrounding the potential availability of Bitcoin exchange-traded funds (ETFs) that can be traded on traditional stock exchanges. This development is seen as a significant shift away from the less-regulated and often unscrupulous crypto platforms like FTX and Binance.
The latest wave of excitement emerged as the Depository Trust and Clearing Corp. (DTCC), a Nasdaq-operated clearing house for stocks and ETFs, included BlackRock’s Bitcoin ETF on its list. BlackRock, the world’s largest ETF provider managing trillions of dollars in assets, had applied in June to register a Bitcoin spot ETF, currently pending approval. The presence of BlackRock’s Bitcoin ETF on the DTCC list has ignited optimism, providing the cryptocurrency with a newfound sense of legitimacy.
Market analyst Samer Hasn from online brokerage XS.com clarified, “This listing in the DTCC does not mean that the fund has actually been launched or that this will inevitably happen. However, it may appear as part of BlackRock’s preparations to launch the ETF soon.”
BlackRock is not the only player in the field, as other companies have also sought approval to introduce similar Bitcoin ETFs, including Grayscale Investments.
In a significant development, a three-judge panel for the DC Court of Appeals overruled the US Securities and Exchange Commission’s (SEC) rejection of Grayscale’s ETF application. The panel found the regulator’s explanation for the rejection inadequate, fueling optimism in the cryptocurrency market. Despite this favorable turn of events, the SEC is yet to officially approve the fund, prompting concerns of investors possibly getting ahead of themselves.
Market analyst Hasn expressed caution, stating, “I think that these rapid rises in Bitcoin are somewhat exaggerated. Regulatory and legislative concerns are still clouding this market, and I don’t see opportunities soon to dispel these concerns as the legal battles continue.”
Apart from the anticipation surrounding ETFs, there’s another compelling reason behind Bitcoin’s surge: fear. As investors seek to diversify their portfolios in times of uncertainty, some are turning to Bitcoin, ironically, as a form of digital safe haven. Often referred to as “digital gold,” Bitcoin has emerged as a means for investors to diversify beyond conventional stocks and bonds.
Bitcoin’s recent rally demonstrates the cryptocurrency’s enduring ability to captivate investors’ imagination and reflects the dynamic interplay between regulatory developments, market sentiment, and economic uncertainty.