Bitcoin, the world’s popular most cryptocurrency, surged to $59,920 stopping just shy of the $60,000 mark but leaping to a five-month high. It had last traded 2.5% higher over the last 24 hours, at a price of $59,112.
Analysts believe traders are optimistic about the chances of the US Securities and Exchange Commission giving the go ahead to the first bitcoin futures exchange-traded fund (ETF). Approval on an ETF that gives mainstream investors exposure to bitcoin would be a landmark for the crypto industry.
Vijay Ayyar, head of Asia Pacific, Luno, told CNBC that the ETF news is being priced in with the market expecting an approval on Monday. “This is driving the price up. However, we are at high time frame resistance here around 58-60K, hence a rejection on the ETF application could send bitcoin back to 53-55K levels. But overall the trend is still bullish and there are a number of other ETF applications in the pipeline as well.”
The world’s biggest cryptocurrency rose 4.5% to its highest level since April 17, and was last at $59,290. It has risen by more than half since September 20 and closing in on its record high of $64,895 hit in April. It may rise further as the first US bitcoin futures ETF are set to begin trading next week.
Charles Hayter, CEO, CryptoCompare, a data firm which tracks ETF products, said ETFs open up a raft of avenues for people to gain exposure, and there will be a swift move to these structures. “It reduces the frictions for investors to gain exposure and gives traditional funds room to use the asset for diversification purposes.”
Bitcoin’s price surge is attributed to a tweet from SEC’s investor education office urging investors to weigh risks and benefits of investing in funds that holds bitcoin futures contracts. A number of fund managers, including the VanEck Bitcoin Trust, ProShares, Invesco, Valkyrie and Galaxy Digital Funds have applied to launch bitcoin ETFs in the United States. According to a Bloomberg report, proposals by ProShares and Invesco, based on futures contracts, were filed under mutual fund rules, which provide significant investor protections.