SINGAPORE/LONDON: Bitcoin held steady on Thursday around its highest level since March 2022 after U.S. regulators approved the first U.S.-listed exchange traded funds (ETFs) to track the cryptocurrency, in a landmark move that could broaden its appeal to investors.
The Securities and Exchange Commission (SEC) said on Wednesday it approved 11 applications, including from BlackRock, Ark Investments/21Shares, Fidelity, Invesco and VanEck.
Three of the ETFs, including BlackRock’s, were trading by 0930 GMT Thursday, with more expected to begin later in the day
Bitcoin was last trading around $46,250 up 0.6% on the day and holding on to gains it made this week in anticipation of the approval.
Dollar gains on yen, Bitcoin slides
The world’s largest cryptocurrency has risen nearly 9% so far this year and hit $47,915 on Tuesday, its highest since March 2022.
It more than doubled in price last year, something of a recovery after a turbulent 2022 for the crypto industry when several major companies collapsed, most notably trading venue FTX.
“At its core, a spot Bitcoin ETF simply provides standardised access to the digital asset as an investment, without altering Bitcoin’s core proposition,” said Marion Laboure, senior strategist at Deutsche Bank Research.
“Only time will tell if greater adoption will lead to more transformational outcomes for the crypto ecosystem and financial system. For now, the ETF approval opens a new chapter for bitcoin prices, though volatile conditions are likely to persist.”
Spot bitcoin ETFs were already available in other markets including in Canada and Europe, but have failed to attract large investor interest.
Industry participants though were optimistic that the new U.S.-listed products would drive greater demand for bitcoin.
Retail and institutional investors “no longer need to rely on futures trading or self custody to have exposure to Bitcoin, and can use a traditional brokerage account,” said Nick Ruck, COO of ContentFi Labs, a blockchain firm focused on IP licensing.
Bitcoin’s supply is fixed so if the ETFs need more to meet demand then they will have to buy in the market, he said.
The industry’s focus is now turning to the second largest cryptocurrency, ether which underpins the ethereum blockchain network.
BlackRock filed for a spot ethereum ETF in November 2023.
Ether’s price rose as much as 4.4% on Thursday to $2,638 its highest since May 2022.
“Now that we’ve had confirmation of what was obviously already a highly-anticipated bitcoin announcement yesterday, the market’s now quickly moving on to ETH, saying well if bitcoin is done, then it’s now very highly likely that the ETH one will get done as well,” said Geoff Kendrick, head of digital asset research at Standard Chartered.