Bitcoin briefly surged above $47,000 in a subdued reaction to the approval of US exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC). Traders are cautiously observing the market, eager to assess the level of investment these products attract.
As of 12:06 p.m. Thursday in Singapore, the largest cryptocurrency was up 1% at $46,417, marking a milestone for digital assets’ investor base expansion. Over the past 12 months, Bitcoin had already witnessed a substantial 160% surge, fueled by expectations surrounding ETFs and a more lenient monetary policy.
Meanwhile, other major cryptocurrencies displayed mixed performance. Ether, the second-largest token, outshone with a over 10% surge in the last 24 hours, reaching $2,622. This bullish momentum is driven by expectations that Ether will be a focal point in the upcoming wave of spot crypto ETF products in the US.
Speculation had arisen about a potential pullback in Bitcoin following the SEC’s green light for spot ETFs, with traders contemplating profit-taking after the prolonged upward trend.
Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets, noted that the news had largely been priced in, and the focus now shifts to monitoring inflows into the newly approved ETFs.
The SEC approved ETFs from major asset management players such as BlackRock, Invesco, and Fidelity, along with offerings from smaller competitors like Valkyrie, marking a significant development in the institutional adoption of cryptocurrencies.
Leo Mizuhara, founder of DeFi institutional asset manager Hashnote, predicted that the initial influx into Bitcoin ETFs would primarily involve reallocations from existing Bitcoin exposure. He emphasized that new money entering Bitcoin through these ETFs would take time to materialize.
The SEC, historically opposed to spot Bitcoin ETFs, faced scrutiny from the crypto community, particularly from Chair Gary Gensler, who has been critical of the industry, citing concerns about fraud and misconduct. However, the SEC’s loss in a legal battle against Grayscale Investments last year hinted at a potential shift in stance.
In a statement, Gensler clarified that while the SEC approved certain spot Bitcoin ETF shares, it did not endorse Bitcoin. He urged investors to remain cautious due to the various risks associated with the cryptocurrency and related products.
Despite ongoing debates about Bitcoin’s role as an inflation hedge and store of value, the approval of spot Bitcoin ETFs by the US is seen as a pivotal moment, propelling crypto from a niche to a mainstream investment, according to Campbell Harvey, a finance professor at Duke University. He anticipates that many investors will seek to diversify their portfolios by incorporating crypto exposure through these ETFs.
