Bitcoin has surged to over $45,000, reaching its highest point in almost two years, fueled by heightened anticipation of the approval of a Bitcoin exchange-traded fund (ETF). The cryptocurrency experienced a 5.2% jump, trading at $45,443 as of 7 am New York time, with other tokens like Ether also witnessing positive movement, rising to 4.1%.
This rally comes as the January 10 deadline for the US Securities and Exchange Commission (SEC) to approve a spot ETF for Bitcoin draws near. The leading cryptocurrency has seen a nearly 20% increase since the beginning of December, driven by optimistic expectations surrounding the potential ETF approval.
Hayden Hughes, co-founder of the social-trading platform Alpha Impact, told Bloomberg that a fear of missing out (FOMO) has gripped some traders in the US and Europe, leading to early New Year's morning buying activity. Options traders have been particularly bullish, betting on Bitcoin hitting $50,000, riding on the optimism surrounding the spot ETF.
The anticipation for the ETF approval has been building throughout 2023, with Bitcoin's price rising over 160% year-to-date as of December 21. The surge reflects investors' optimism for the approval of the first US spot Bitcoin ETF, which would mark a significant milestone for cryptocurrency investors.
Discussions between the SEC and various asset managers, including major players like BlackRock, WisdomTree, and Valkyrie, have progressed to technical details. This has led experts to speculate that an approval might be imminent, potentially in early January — most likely by January 3.
An Exchange-Traded Fund (ETF) is a type of pooled investment security, similar to a mutual fund but with distinct differences. ETFs, like mutual funds, can track indices, sectors, commodities, or other assets. However, unlike mutual funds, ETFs can be traded on a stock exchange throughout the day.
ETFs, considered baskets of securities, fluctuate in price during the trading day as they are bought and sold. This differs from mutual funds, which only trade once a day after market closure. ETFs can include a diverse range of investments such as stocks, commodities, or bonds, providing investors with various options for diversification.
One of the key features of ETFs is their marketability—they have a share price, making them easily tradable on exchanges. This, coupled with lower expense ratios and fewer broker commissions, contributes to their popularity compared to buying individual stocks.
As anticipation for the approval of a Bitcoin ETF intensifies, investors are closely watching the SEC's decision, with the potential to further impact the cryptocurrency market and bring new opportunities for market participants.
First Published: Jan 2, 2024 7:03 PM IST
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