In a landmark moment for the cryptocurrency market, Bitcoin soared beyond the $49,000 threshold for the first time since December 2021, propelled by the Bitcoin ETF debut as the inaugural US exchange-traded funds (ETFs) commenced trading, directly investing in the leading cryptocurrency. The token marked an impressive 6.7% gain, reaching $49,021, following the approval of spot Bitcoin ETFs by the US Securities and Exchange Commission (SEC) after Wednesday’s market closure. However, it subsequently retreated and was recently trading around $46,000. Simultaneously, smaller tokens like Ether, Cardano, and Polkadot experienced upward movement.
All 11 ETFs are actively trading, witnessing over $2.6 billion in trading volume within the initial hours. The Grayscale Bitcoin Trust, a major player in the cryptocurrency investment landscape, reported a trading volume of $1.3 million, as per data compiled by Bloomberg. This is a remarkable start compared to the early days of Bitcoin futures funds in 2021, which saw a turnover of nearly $1 billion for the entire day. Back then, the futures fund debut ranked as the second-most heavily traded fund on record.
“The approval should be very bullish mid- and long-term, but for the short-term, it remains to be seen,” remarked Jaime Baeza, founder and managing partner at the crypto hedge fund AnB Investments. He added, “The market had almost fully priced in the approval, which is being partially confirmed by the lack of a super rally, and it remains to be seen if we get the typical ‘buy the rumor – sell the news’ type of action in the short-term.”
Contrary to the positive momentum in the cryptocurrency sector, shares of companies associated with Bitcoin faced a downturn. MicroStrategy, a Bitcoin proxy, saw losses for the fifth consecutive day. Mining companies Marathon Digital and Riot Platforms both experienced around a 12% decline, while Coinbase Global, the largest US crypto exchange, witnessed a 5.1% drop.
The SEC, which had long opposed spot Bitcoin ETFs, notably shifted its stance following a legal setback in a case against asset manager Grayscale Investments last year. Speculation arose that the regulatory body might relent on spot ETFs after losing the legal battle. Grayscale Investments, managing approximately $29 billion through its Grayscale Bitcoin Trust, has now converted it into an ETF.
“The ETF is effectively a watershed moment for financial advisers who now must have an opinion on this asset class,” commented Sui Chung, chief executive of CF Benchmarks, a data provider for several approved ETFs. “They might still not recommend it to their clients, but the fact it’s now available through a regulated product means they must at least have a viewpoint. This could open the door to a much more steady flow of interest and flows into the asset class.”
The Bitcoin ETF debut marks a transformative milestone in the cryptocurrency landscape, ushering in new possibilities and shaping the future trajectory of digital asset investments.
Source: bloomberg
