Bitcoin
and other cryptocurrencies surged Monday on the rising possibility that the Securities and Exchange Commission soon will approve the first spot Bitcoin exchange-traded fund, a key catalyst for cryptos.
The price of Bitcoin has rallied more than 3% over the past 24 hours to above $27,800, blowing past the confines of a stagnant trading range around $26,000 that had taken hold in the past week. The largest digital asset is nearing the key $28,000 level beyond which is its recent peak around $28,500.
While cryptos continue to be impacted by the macro backdrop—with Bitcoin reacting alongside the
Dow Jones Industrial Average
and
S&P 500
to interest-rate expectations and new conflict in the Middle East—crypto-native catalysts have returned to the fore.
In focus are looming decisions from the Securities and Exchange Commission (SEC) over spot Bitcoin exchange-traded funds (ETFs) and the conversion of the
Grayscale Bitcoin Trust
to a spot Bitcoin ETF.
The regulator could decide this month whether to wave through the first such ETFs—as applied for by BlackRock, Invesco, and other financial giants this summer—and whether to appeal a legal win by Grayscale that sets the stage for the trust conversion. The latest news on the matter, which has ushered in the latest gains for Bitcoin, is that the SEC doesn’t plan to appeal a federal court ruling that all but paves the way for Grayscale to convert its trust to an ETF, as Barron’s has reported.
While futures ETFs that hold Bitcoin have existed for years, no spot Bitcoin ETF, which holds Bitcoin itself as opposed to derivatives tracking the token, yet trades in the U.S., though momentum from financial firms and the legal backdrop have improved this year. A spot Bitcoin ETF would be expected to usher in a fresh wave of investor interest in digital assets and pave the way for greater institutional interest in the asset.
A key sign that traders have turned particularly bullish on the Grayscale conversion Monday was a shift in the Grayscale discount.
As a relatively illiquid trust, Grayscale’s Bitcoin fund has for almost two years traded at a discount to its net asset value, but that discount has narrowed amid bets that the SEC will wave through the fund’s conversion, which would see it move to par. The Grayscale discount moved to its narrowest since December 2021 on Monday at below 16%, having closed from a discount of near 19% at the beginning of October.
Beyond Bitcoin,
Ether
—the second-largest crypto—advanced 2% to $1,580. Smaller tokens or altcoins were also buoyant, with
Cardano
climbing 2% and
Polygon
popping 1%. Memecoins also advanced, with
Dogecoin
and
Shiba Inu
up 1% each.
Write to Jack Denton at [email protected]
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