Bitcoin advanced to a fresh high after several giants of traditional finance applied for permission to launch spot exchange-traded funds in the US, fueling optimism about digital assets gaining more mass-market appeal.
The largest cryptocurrency rose as much as 3.4% to $31,504 on Thursday, the highest level since June 8 last year. Bitcoin has surged 90% this year, with gains in the past few weeks spurred by renewed speculation that an exchange-traded fund that invests directly in the token will eventually be approved in the US.
Thursday’s advance was broad, with other major tokens like Ether rising even as equity markets slumped around the world. Bitcoin is now back at levels last seen before the collapse of crypto hedge fund Three Arrows Capital rocked markets and touched off a daisy chain of defaults.
BlackRock Inc. refiled paperwork with the US Securities and Exchange Commission on Monday through Nasdaq to add new details to its proposal for a spot ETF. Other large firms including Fidelity Investments have also sought permission in the past month to launch such vehicles.
Even with Bitcoin almost doubling this year, crypto markets are being shadowed by concerns about low liquidity, which can drive outsize price moves. Investors are also taking on increased leverage to juice bullish bets, said Kyle Doane, a trader at Arca.
“Historically, liquidity is definitely lower around holidays and combined with a relatively large increase in leverage recently, prices will be more susceptible to sharp movements,” he said. “The market is still leaning bullish and overall sentiment continues to improve.”
A spot Bitcoin ETF has long been seen as the holy grail for the crypto industry, as a way to reach a broader swath of consumers, but the Securities And Exchange Commission has repeatedly rejected prior filings. Bitcoin reached a record of almost $69,000 in late 2021.
Shares of crypto-related companies have joined in the latest rally. Coinbase, the largest US exchange, has jumped 9.5% so far in July, while Bitcoin proxy MicroStrategy gained 10.4%. Crypto miners Marathon Digital and Riot Platforms, increased 12.3% and 15%, respectively.
--With assistance from Emily Nicolle.
