Bitcoin experienced a brief surge, surpassing $47,000, in a subdued reaction to the approval of exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC). The cryptocurrency steadied at $46,060 as of 7:48 a.m. Thursday in London after a modest climb, with market participants eager to observe the funds’ reception and their impact on the market.
The SEC’s decision to approve funds from major asset management players like BlackRock, Invesco, and Fidelity, along with offerings from smaller competitors such as Valkyrie, is seen as a milestone that broadens the investor base for digital assets. Despite the anticipation of ETFs and expectations of looser monetary policies, Bitcoin had already surged over 160% in the past 12 months.
Other major cryptocurrencies showed mixed performance. Ethereum, the second-largest token, stood out with a 9% gain in the past 24 hours, reaching $2,587. Traders anticipate that Ethereum could be the focus of the next wave of spot crypto ETF products in the US.
Market observers speculated whether Bitcoin was poised for a pullback following the green light for spot ETFs, particularly if speculators decided to take profits from the token’s months-long ascent.
Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets, suggested that the news had largely been “priced in,” and attention would now shift to monitoring inflows into the ETFs.
Leo Mizuhara, founder of DeFi institutional asset manager Hashnote, noted that most money moving into Bitcoin ETFs initially would likely be reallocations from existing Bitcoin exposure. Mizuhara emphasized that it would take time for new money to flow into Bitcoin via the newly approved ETFs.
While the SEC had opposed spot Bitcoin ETFs for over a decade, the recent approval marked a significant departure from its previous stance. SEC Chair Gary Gensler, known for his skepticism towards the crypto sector, acknowledged the approval but maintained caution, emphasizing the risks associated with Bitcoin and crypto-related products.
Crypto supporters argue that Bitcoin serves as an inflation hedge and a store of value, akin to digital gold. The approval of spot Bitcoin ETFs in the US is seen as a pivotal moment, signaling crypto’s transition from a niche to mainstream investment, according to Campbell Harvey, a finance professor at Duke University. Investors are expected to diversify portfolios by adding crypto exposure through these newly approved ETFs.
