In a remarkable rally, Bitcoin, the world’s most dominant cryptocurrency, experienced an 11% surge on Tuesday, driven by mounting speculation surrounding the possible approval of a spot exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC).
The cryptocurrency’s price catapulted to $33,433.8, reaching its highest level since May 2022 and decisively breaching the $30,000 threshold for the first time since July.
Ethereum, the second-largest cryptocurrency globally, followed suit with an impressive 7% increase in its value.
The surge in Bitcoin’s price came on the heels of a significant legal victory for digital asset firm Grayscale, which had been embroiled in a legal battle with the SEC. The D.C. Circuit Court of Appeals officially ruled that the agency had unjustly rejected Grayscale’s application for an ETF directly tied to Bitcoin’s price.
Furthermore, reports from the media hinted at the possibility of a spot Bitcoin ETF approval from BlackRock. The iShares Bitcoin Trust, associated with BlackRock, appeared to have been listed on the website of the Depository Trust and Clearing Corporation. While these developments did not confirm the approval of a spot Bitcoin ETF, they did foster optimism that such an approval could materialize this year, attracting more institutional investors into a crypto market grappling with severe depletion.
Another factor that contributed to the cryptocurrency’s resurgence was the recent weakness of the U.S. dollar. Market participants increasingly speculated that the Federal Reserve had completed its interest rate hikes for the year, which, in turn, provided support for the crypto markets.
Several prominent financial entities, including BlackRock Inc (NYSE:BLK), Grayscale, Ark Ventures, and VanEck, have sought approval for a spot Bitcoin ETF in the United States. Over the past year, the SEC had repeatedly turned down these applications, culminating in a lawsuit filed by Grayscale, which ultimately ruled in favor of the digital asset firm.
The approval of a spot Bitcoin ETF is anticipated to attract significant capital into the crypto market, which has grappled with a notable lack of liquidity following a price crash and the high-profile insolvencies that have marked the past year.
This shortage of liquidity is evident through Bitcoin’s volumes, which have languished at multi-year lows. This decline in retail interest was precipitated by allegations of fraud and unlicensed exchange operations directed at major industry players like Binance and Coinbase Global Inc (NASDAQ:COIN).
