Bitcoin started the week on a positive note as investors eagerly anticipated the potential approval of a U.S. bitcoin exchange-traded fund (ETF). The cryptocurrency rose 1.5% to $45,022.00 on Monday, according to Coin Metrics. This surge came as major players like BlackRock and Grayscale, among others, submitted final updates to the Securities and Exchange Commission (SEC), including key fee disclosures that bolstered investor confidence in the likelihood of approval.
According to Jim Angel, an associate professor specializing in financial market structure at Georgetown University’s McDonough School of Business, the competition among ETF issuers resembles a “price war,” with multiple vendors offering similar products and competing primarily on price.
Bitcoin’s price peaked at $45,208.95, marking its highest level since January 3rd. The SEC faces a deadline to approve or reject the ETF application of Ark 21 Shares on Wednesday, and it is widely anticipated that the agency will approve several applications simultaneously to level the playing field.
Former SEC chair Jay Clayton expressed confidence in the inevitability of approval, stating, “There’s nothing left to decide. … This is a big step not just for bitcoin but for finance generally.” Such a decision would be a significant milestone for the cryptocurrency industry, which has historically been anti-establishment but has gained recognition from institutional investors for the value of assets like bitcoin and ether.
Several prominent firms, including Fidelity, Invesco, VanEck, WisdomTree, and Franklin Templeton, are competing to launch a bitcoin ETF alongside BlackRock. While some investors believe that the immediate impact of approval might be overestimated, they see the event as paving the way for increased institutional investment in the long run.
Galaxy Digital, in partnership with Invesco for its proposed bitcoin ETF, estimates the potential market size for a U.S. bitcoin ETF to be approximately $14 trillion in the first year post-launch, expanding to $26 trillion in the second year, and reaching $39 trillion in the third year.
The positive sentiment surrounding bitcoin also influenced ether, which saw a nearly 1% increase. Many of the firms vying for a bitcoin ETF have also filed applications for spot ether ETFs, with the SEC’s decision on these applications expected later in the year. The broader cryptocurrency market, however, remained relatively flat.
In contrast, crypto equities experienced a decline, with Coinbase slipping more than 3% and mining companies like Iris Energy and Marathon Digital also seeing losses.
As the week progresses, all eyes are on the SEC as the anticipation for the approval of a U.S. bitcoin ETF continues to drive market sentiment and investment strategies within the cryptocurrency space.
(Source: Coin Metrics | CNBC | Bloomberg)
