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  • Writer's pictureJoel Lewitt

Bitcoin Reaches Nearly 18-Month High Amid Growing ETF Speculation

Bitcoin experienced a notable 6% surge on Tuesday, reaching $35,198, marking its highest price point in nearly 18 months. The rally was attributed to growing speculation that the approval of an exchange-traded bitcoin fund (ETF) is on the horizon.

This surge followed a remarkable 10% gain on Monday, marking the most substantial single-day increase in almost a year. The optimism spread not only within the cryptocurrency market but also impacted related stocks.

The anticipation revolves around the possibility of the U.S. Securities and Exchange Commission (SEC) giving the green light to an ETF that would hold bitcoin on behalf of fund investors. Such an approval is expected to trigger heightened demand. The argument in favor of a spot bitcoin ETF is that it would make cryptocurrency accessible to investors who have been cautious about entering the crypto market, thereby attracting a fresh wave of capital into the sector.

Steen Jakobsen, Chief Investment Officer at Saxo, emphasized the importance of a broader audience, stating, "The value of any asset, basically, is the amount of people using it. So the ETF would make a large audience and increase liquidity."

Bitcoin, known for its price volatility, has already doubled in value in the current year, with its latest price sitting at $34,129, showing a 3.2% increase. Ether, the second-largest cryptocurrency, also reached its highest value since August. Stocks linked to the crypto market, including major U.S. exchange Coinbase Global (COIN.O) and bitcoin holder MicroStrategy (MSTR.O), saw gains in after-hours trading.

Notably, several major U.S. financial firms, including investment giant BlackRock (BLK.N), have pending applications for bitcoin ETFs, fueling speculation that such applications might be approved.

Reports of BlackRock's iShares ETF listing on the clearing house DTCC's website further stoked expectations, although the timing and reasons for this listing remain unclear, with DTCC and BlackRock yet to provide official comments. This growing optimism was also bolstered by recent reports, including from Reuters, suggesting that the SEC would not appeal a court ruling that previously rejected an ETF application from crypto company Grayscale Investments.

Geoffrey Kendrick, Head of Digital Assets Research at Standard Chartered, pointed out that "The SEC being pressured by the courts increases the probability" of an ETF approval.

Last week, BlackRock denied an erroneous report claiming that its ETF had already been approved. Data from the crypto derivatives analysis site Coinglass indicated significant short-covering activity in the bitcoin market over the past 24 hours.

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