Bitcoin soars to near 18-month high as ETF speculation mounts

  • Bitcoin surges 10% on Monday and a further 5% in Asia trade
  • Ether and crypto-linked stocks gain
  • Bitcoin ETF seen spurring demand; BTC shorts squeezed

LONDON/SINGAPORE/NEW YORK, Oct 24 (Reuters) – Bitcoin rose by nearly 10% on Tuesday to $34,872, its highest in nearly a year-and-a-half, on mounting speculation that an exchange-traded bitcoin fund is imminent.

That followed a 10% surge on Monday, when bitcoin posted its best day in almost a year, and the bullishness spread across the wider crypto market and into related stocks.

Any approval by the U.S. Securities and Exchange Commission (SEC) of an exchange-traded fund (ETF) that owns bitcoin on behalf of fund investors is predicted to fuel demand.

A spot bitcoin ETF, the argument goes, would allow investors previously wary of crypto access to the asset via the stock market, ushering in a new wave of capital to the sector.

“The value of … any asset, basically, is the amount of people using it,” said Steen Jakobsen, chief investment officer at Saxo. “So the ETF would make a large audience and increase liquidity.”

Bitcoin, a volatile asset whose price has doubled so far this year, was last up 9.51% at $34,530, the highest level since May last year. The second-largest cryptocurrency, ether , climbed 6.82% to $1,825.50, its highest since August.

Crypto-linked shares such as major U.S. exchange Coinbase Global (COIN.O) and bitcoin owner MicroStrategy (MSTR.O) rose in after-hours trade.

Investment giant BlackRock (BLK.N) is among several major U.S. financial firms with pending applications for bitcoin ETFs.

Speculation on their likely approval was fuelled by BlackRock’s iShares ETF listing on the website of clearing house DTCC. It was unclear when or why the iShares ETF was added to the DTCC list. DTCC and BlackRock did not immediately respond to requests for comment.

Anticipation also grew after reports this month, including from Reuters, that the SEC won’t appeal a court ruling it had been wrong to reject an ETF application from crypto firm Grayscale Investments. On Monday, the court formalized its ruling, sending the application back to the SEC for review.

“The SEC being pressured by the courts increases the probability” of an ETF approval, said Standard Chartered’s head of digital assets research Geoffrey Kendrick.

Last week BlackRock denied an erroneous report that its ETF had been approved. Data on crypto derivatives analysis site Coinglass showed heavy bitcoin short-covering in the last 24 hours.

Separately, Grayscale on Tuesday introduced five crypto sector indices along with FTSE Russell which would track the performance of crypto assets in five categories: currencies, smart contract platforms, financials, consumer and culture, and utilities and services.

(This story has been corrected to fix the Bitcoin price gain in paragraph 1)

Reporting by Tom Wilson and Elizabeth Howcroft in London, Tom Westbrook and Rae Wee in Singapore, Brigid Riley in Tokyo and Chibuike Oguh in New York
Editing by Shri Navaratnam, Simon Cameron-Moore, Michelle Price

Our Standards: The Thomson Reuters Trust Principles.

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Tom covers crypto companies, regulation and markets from London, focusing through 2022 on the Binance crypto exchange. He has worked at Reuters since 2014, with a previous posting to Tokyo where he uncovered abuses in Japan’s immigration system and won a joint Overseas Press Club award for reporting on the tobacco giant Philip Morris.

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