Excitement over ETF to track bitcoin takes crypto to $ 60,000

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Bitcoin hit $ 60,000 on October 15 for the first time since April, as traders predict U.S. regulators will approve the first exchange-traded fund to track the cryptocurrency.

Approval of an ETF that will buy bitcoin futures contracts, but not the coins themselves, would increase the legitimacy of the cryptocurrency and facilitate exposure for institutional investors. Four bitcoin futures ETF applications, submitted in August, are pending approval by the United States Securities and Exchange Commission.

The price of Bitcoin rose ahead of a regulatory deadline next week for the SEC to act on some of these applications. On October 14, a tweet from an SEC Twitter sub-account was seen to hint at an endorsement, urging investors to weigh the potential risks and rewards before investing in such a fund.

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Noelle Acheson, head of market analysis at crypto lender Genesis Global Trading, said approving a bitcoin futures ETF would be a sentiment boost, a result she put a rating on. minus 75%.

Cryptocurrency backers have been trying since 2013 to gain approval for a bitcoin-based ETF. The SEC has repeatedly denied requests, saying crypto exchanges are too opaque to determine whether prices are being met fairly.

No major SEC-supervised stock exchange trades bitcoin directly. However, several, including the Chicago Mercantile Exchange, trade bitcoin futures, which allow investors to bet on the direction of the cryptocurrency’s price without owning the volatile coins themselves. These contracts are transparent in price and easily traded in larger sizes, which can allow the SEC to become familiar with an ETF that owns them, according to lenders.

“We all know it’s going to happen. The question is when,” said Tim Grant, head of European operations at the Galaxy Digital cryptocurrency exchange.

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Analysts and investors alike say bitcoin’s recent gains could be reversed if approved funds don’t see significant inflows, and it’s not clear what pent-up demand exists among institutional investors. Those who wish to gain exposure to cryptocurrencies already have indirect ways to do so, such as buying shares of the Coinbase Global cryptocurrency exchange, which went public in April, or shares of several companies. listed bitcoin mining companies.

Bitcoin has been generally volatile this year. The price hit $ 63,381 in April, according to Dow Jones Market Data, bolstered by Coinbase’s initial public offering. It then fell more than 50% through July, driven by bitter sentiment, sarcastic tweets from Tesla CEO Elon Musk on cryptocurrency and China’s ban on bitcoin transactions.

It hit $ 60,327 at the start of Oct. 15, according to CoinDesk, taking its earnings this year to around 106%.

Write to Caitlin Ostroff at [email protected] and to Paul Vigna at [email protected]

This article was published by Dow Jones Newswires

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