Bitcoin resumes ascent with ETF approval expectations recovering

Bitcoin resumes ascent with ETF approval expectations recovering

Bitcoin has turned positive again during a roller-coaster start to the year, recouping a portion of losses from a flash crash Wednesday, with investors shaking off concern that US regulators won’t authorize exchange-traded funds to directly hold the digital-asset.

The largest cryptocurrency tumbled as much as 9.2% yesterday, or the most on an intraday basis since November 2022, after Matrixport analyst Markus Thielen wrote in a note that he expects the Securities and Exchange Commission to reject all Bitcoin ETF proposals this month. Bloomberg Intelligence analysts estimate that there is about a 90% probability the SEC will approve the ETFs by Jan. 10.

Bitcoin rose as much as 3.6% to $44,482 in New York on Thursday, before paring the gain. The digital currency surged almost 160% last year on growing optimism that SEC approval of the long-sought ETFs will bolster overall demand.

“The market is keenly focused on the potential for an ETF approval, so even small whiffs of news can cause relatively big market moves as leveraged positions get stopped out,” said Matthew Hougan, chief investment officer at Bitwise Asset Management, which has an application to offer a Bitcoin ETF pending with the SEC. “That’s what happened on Wednesday, and the market is rebounding today as it reconsiders.”

Traders have taken comfort in a fresh wave of filings from potential issuers such as ARK 21Shares, which filed an amended registration of securities for its Bitcoin exchange-traded fund. Analysts caution that the amendments don’t necessarily mean an approval is guaranteed.

“The recent price action related to excitement about approval and launch of a spot Bitcoin ETF in the coming days,” said Cosmo Jiang, a portfolio manager at Pantera Capital, one of the industry’s oldest and biggest funds. “There’s a lot of reason to believe this, including the filing changes in the ETFs.”

The world’s biggest asset manager, BlackRock Inc., started the latest spot Bitcoin ETF rush over the summer, and since then other heavyweights, such as Fidelity, joined it as well. A legal victory by Grayscale Investments in August opened the door to the ETFs’ approval.