Bitcoin Surges Over $45,000 Amidst Fund Speculation

Bitcoin surged above $45,000 (£35,603) on Tuesday for the first time since April 2022 amidst speculation that the US securities regulator may approve one or more exchange-traded spot Bitcoin funds as soon as this week.

The biggest cryptocurrency experienced sharp falls in value at the end of 2022 following the collapse of major crypto firms including FTX and the so-called stablecoin TerraUSD, then rose nearly 160 percent over the course of last year – a pattern typical of the notoriously volatile asset.

The latest rises saw Bitcoin trading at just over $45,500 on Tuesday afternoon GMT after rising more than 6 percent over the preceding 24 hours.

The figure is, however, still far lower than the all-time high of $69,000 it hit in November 2021.

Regulatory approval speculation

The second-biggest cryptocurrency Ether rose more than 4 percent in 24 hours to over $2,300, having closed out 2023 with a price rise of 91 percent, while crypto-related stocks also saw gains.

Industry analysts said the rises were related to investor speculation that the SEC may issue approvals for exchange-traded funds (ETFs) linked to the price of Bitcoin early this week ahead of a 10 January decision deadline.

Such funds could increase the mainstream acceptance of cryptocurrencies and bring in millions more investors and billions in investments.

The SEC has repeatedly rejected such applications in recent years, citing fears over market manipulation, but there have been signs that it may be preparing to approve at least some of the 13 proposed spot Bitcoin ETFs proposed by asset management firms.

Approaching deadline

Reuters and other media agencies cited unnamed sources as saying that issuers may be able to launch ETFs as soon as 10 January, the date by which the SEC is required to either approve or reject an application filed by a joint venture between Ark Investments and 21 Shares.

Ahead of that deadline, the SEC may inform firms of its decision as soon as Tuesday or Wednesday ahead of a launch the following week, sources told Reuters.

Analysts said it is unclear whether an approval could lead to further market gains.

Chris Weston, head of research at Pepperstone, said in a research note that a green light could take Bitcoin and related stocks “another leg higher” but could equally lead to a “buy-the-rumour, sell-on-fact scenario”.