Cryptocurrency bitcoin breached the $35,000 mark briefly Wednesday for the first time in 18 months and is riding a 20% value surge over the last week. The token was trading around $34,675 later in the day.
But why the sudden bounce?
Mounting evidence suggests bitcoin, and potentially other cryptocurrencies, could be getting close to entering a more mainstream investment window via exchange-traded funds that can be bought and sold on a stock exchange.
According to a breakdown by Investopedia, an exchange-traded fund, or ETF, is a type of pooled investment security that operates much like a mutual fund. Typically, ETFs will track a particular index, sector, commodity or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities, per Investopedia.
A spot bitcoin ETF, which is simply an exchange-traded fund that tracks the price of bitcoin, opens the door for, in this case, bitcoin investing without having to manage a crypto account or crypto wallet.
A move by investment giant BlackRock is powering up the hype around bitcoin ETFs after financial services provider Depository Trust and Clearing Corporation posted BlackRock’s spot bitcoin ETF on an eligibility list, even though the fund is still awaiting approval by the U.S. Securities and Exchange Commission. And some investors are seeing the move as a sign that SEC approval could be forthcoming.
“This listing in the DTCC does not mean that the fund has actually been launched or that this will inevitably happen,” Samer Hasn, market analyst at online brokerage XS.com, told CNN. “However, it may appear as part of BlackRock’s preparations to launch the ETF soon.”
Earlier this summer, the U.S. Court of Appeals for the District of Columbia Circuit overturned an SEC decision to reject a spot bitcoin ETF application from crypto asset management firm Grayscale, in a ruling that noted the regulator had failed to adequately explain why it rejected the firm’s application, per CNN.
All signs appear to be pointing to crypto investment having a new presence via ETF opportunities and that collective vibe is helping drive the current rise in valuations.
“This is a significant development and shows that U.S. institutions and U.S. investors are embracing the news that a U.S.-listed spot bitcoin exchange-traded-fund (ETF) appears imminent,” wrote Markus Thielen, head of research at crypto services provider Matrixport, according to a report from CoinDesk.