The largest cryptocurrency in the world, Bitcoin (BTC), experienced a significant upswing this week and reached a two-month high thanks to a number of applications for an exchange-traded fund (ETF) that tracks the digital asset. The surge of as much as 14% over the past three days has sparked optimism and renewed speculation regarding increased institutional interest in Bitcoin.
Quick facts:
- Bitcoin’s price surged over $30,000, hitting a two-month high, driven by increased institutional interest
- Institutions such as BlackRock, WisdomTree, Valkyrie, and Citadel have applied for Bitcoin ETFs, indicating renewed confidence and institutional interest in the crypto industry.
- While institutional involvement historically drives crypto market rallies, 2022 witnessed fund withdrawals due to bankruptcies, rising interest rates, and regulatory pressures.
As of Thursday, Bitcoin had steadied at $30,300 after briefly touching the two-month high. Ethereum, the second-largest cryptocurrency, also experienced a boost, rising nearly 6% and reaching a similar two-month high.
The Bitcoin ETF Application Race is heating up
This rally in cryptocurrency markets comes as prominent players in the financial industry, including BlackRock Inc., the largest asset manager globally, applied for an ETF specifically designed to track Bitcoin.
Notably, other institutional investors such as WisdomTree, Valkyrie, and Citadel quickly followed suit, filing their own applications for Bitcoin ETFs. Coinbase, a major cryptocurrency exchange, is expected to serve as the custodian for the BlackRock ETF.
Institutional buying has historically been a significant catalyst for crypto market rallies, as witnessed during the 2021 surge that propelled Bitcoin to record highs. However, throughout 2022, a combination of high-profile bankruptcies, rising interest rates, and regulatory pressures led to a substantial withdrawal of institutional funds from the market.
The recent ETF filings have rekindled hopes of a resurgence in institutional interest in cryptocurrencies, even as the industry grapples with a regulatory crackdown on its major players. The U.S. Securities and Exchange Commission (SEC) initiated lawsuits against leading exchanges Binance and Coinbase, further alleging fraud and wash trading against Binance and its founder, Changpeng Zhao.
These lawsuits resulted in significant losses across the crypto market, pushing Bitcoin to three-month lows earlier this month. The regulatory challenges also prompted a wave of withdrawals from centralized crypto exchanges in the United States, following warnings from Binance about the potential loss of support from traditional banking partners.
Despite the recent gains, Bitcoin still remains below its all-time high of $69,045 achieved in late 2021. Additionally, due to the SEC lawsuits’ impact on market sentiment, trading volumes in the cryptocurrency market have decreased in recent weeks.
Bitcoin’s surge past the $30,000 mark, driven by growing institutional interest through ETF applications, has reignited optimism within the cryptocurrency community. Despite the regulatory crackdown by the US SEC and the history of spot ETF applications being rejected, there is growing market confidence in BlackRock’s potential for success. This optimism stems from BlackRock’s standing and track record with the SEC, which sets it apart and increases the likelihood of its ETF application receiving approval.
