Bitcoin ($BTC) has been on a bullish rally, taking it to hit the key $35,000 level on the back of a 25% monthly rise. According to crypto services provider Matrixport, most of these gains were accumulated during the US trading hours.
Its head of research, Markus Thielen, wrote: “This is a significant development and shows that U.S. institutions and U.S. investors are embracing the news that a US-listed spot Bitcoin exchange-traded-fund (ETF) appears imminent.”
ETFs are a popular investment product that allows investors to gain access to cryptocurrencies without buying the underlying digital assets themselves. They are traded on an exchange and track the performance of the underlying asset.
A spot Bitcoin ETF will therefore be backed by physical Bitcoins that underpin the value of the ETF. If the value of the digital coins backing the ETF rises, the value of the investment can generally be expected to increase too, making it a cheaper and easier way to invest in the top coin.
According to several analysts, a green light from the regulatory authorities on spot Bitcoin ETFs would lead to a rush of mainstream money into the sector.
Recently, investment firm BlackRock took a step ahead in its iShares spot Bitcoin ETF application as it got listed on the Depository Trust & Clearing Corporation (DTCC). This move is often made before an official approval by the United States Securities and Exchange Commission (SEC).
An approval of the same would set a precedent for the cryptocurrency market as other spot ETFs applications filed by ARK Investment, Fidelity, and Valkyrie, will soon get a review from the regulator too.
However, the SEC is also notoriously known for delaying such applications. In September, it decided to push back on its decision on several proposed Bitcoin ETFs including BlackRock and Fidelity citing the need for more time to thoroughly evaluate the proposals. For the current set of applications, the regulator has time until 10 January 2024, to decide whether to approve or deny the ETF.
Back in August, Grayscale won a round in the court for its spot BTC ETF application where a US appellate court asked the SEC to re-evaluate its previous denial of the application. The move was seen as bullish in the crypto industry.
In October, the news of Fidelity Investments amending its spot Bitcoin ETF filing, addressing some of the SEC’s concerns, also helped $BTC to significantly increase in value.
In its report, Matrixport shed light on the hold that US investors and institutions have at present. While there are about 420 million – 440 million cryptocurrency owners globally, 260 million are in Asia and 54 million in North America. This is followed by 38 million in Africa, 31 million in South America and 1.5 million in Oceania. While Asia is the largest group by far, the “buying power of US traders and institutions is a magnitude larger”.
The market capitalisation of the cryptocurrency market also climbed to $1.29trillion this week on the back of the broader bullish pressure. It witnessed a 99% increase in volume, with $92billion traded across the market.
Here, Bitcoin continued to reign as the top cryptocurrency, with 53% dominance, and is leading even the most high-beta altcoins in terms of performance, said Matrixport. On the flip side, technical indicators also hinted that a pause in the bullish momentum was likely.