Bitcoin hits $US35,000 for first time since 2022 on exchange-traded fund optimism

Bitcoin extended a rally fuelled by expectations of fresh demand from exchange-traded funds, reaching the highest price since May last year.

The largest digital asset rose as much as 11.5 per cent to top $US35,000 ($55,040) and was trading at $US34,580 as of 11am in Singapore on Tuesday, taking its year-to-date rebound from 2022’s digital-asset rout to 109 per cent.

The possible approval in coming weeks of the first US spot Bitcoin ETFs is stoking speculative ardour for the token. Asset managers BlackRock and Fidelity Investments are among those in the race to offer such products. Digital-asset bulls argue the ETFs would widen adoption of the cryptocurrency.

A US federal appeals court on Monday also formalised a victory for Grayscale Investments in its bid to create a spot Bitcoin ETF over objections from the US Securities and Exchange Commission.

The SEC has so far resisted allowing ETFs that invest directly in Bitcoin, citing risks such as fraud and manipulation in the underlying market. The court ruling and the applications from investment titans have stoked speculation that the agency will relent.

ETF ticker

Bloomberg Intelligence ETF analyst Eric Balchunas flagged on X, the platform formerly known as Twitter, that the iShares Bitcoin Trust “has been listed on the DTCC” with the ticker IBTC.

BlackRock, the world’s largest asset manager, operates the iShares business. The DTCC is the Depository Trust and Clearing Corp, which undertakes clearing and settlement in US markets.

“This doesn’t mean it’s technically approved,” Mr Balchunas said in an interview. “It’s not home free. But this is pretty much checking every box that you need to check before you launch an ETF. When we see a ticker added, those things are usually right before launch.”

Bitcoin also surged 10 per cent intraday at the start of last week on ETF hype. On that occasion, an erroneous report that BlackRock had won approval to launch a fund caused the move and the rally cooled once the mistake came to light.

Ether, the second-largest token, jumped 7 per cent to exceed $US1800 in Bitcoin’s slipstream on Tuesday. Smaller coins such as BNB, XRP and meme favorite Dogecoin also gained.

SEC clampdown

The SEC has already allowed ETFs that hold Bitcoin and Ether futures. But the agency overall has intensified a crypto crackdown following last year’s market crash and blow-ups like the bankruptcy of the FTX exchange, whose co-founder Sam Bankman-Fried is on trial for fraud.

Bloomberg Intelligence analysts Elliott Stein and James Seyffart have said “approval of a spot Bitcoin ETF looks inevitable” and that a batch of funds is likely to be given the green light, though the timing remains uncertain.

Bitcoin remains below its pandemic-era, 2021 peak of almost $US69,000, squeezed by rising interest rates that hit demand for risky assets. The token’s correlations with assets such as stocks, bonds and gold have ebbed lately, stoking questions about whether mainstream investors have disengaged.

“Liquidity is somewhat better than before,” said Justin d’Anethan, head of business development in the Asia Pacific at crypto market maker Keyrock.

“Prices have now recuperated and with it a certain amount of liquidity — still nothing compared to the euphoria of 2020-2021, though.”

Bloomberg