Bitcoin’s 10% jump to $30,000 hints at trader ‘playbook’ for ETF launches
New York: A brief 10 per cent surge in Bitcoin on Monday gave traders a glimpse into the possible impact of a looming US Securities & Exchange Commission decision on whether to allow exchange-traded funds investing directly in the token.
An erroneous report that BlackRock had won approval to launch a spot ETF rapidly sent the largest digital asset to $30,002 on Monday, the highest price since March. The move cooled after the world’s biggest money manager said its application remains under review, still leaving Bitcoin 4.4 per cent higher for the session.
BlackRock is among about a dozen firms seeking to offer the first US spot Bitcoin ETFs amid expectations that the SEC may soon end its opposition to the products. Optimists argue such funds will help spur wider crypto adoption.
“This was like a dry run for what’s going to happen if these things actually do get approved,” Bloomberg Intelligence ETF analyst James Seyffart said. “It basically gave traders a playbook.”
Speaking on Bloomberg Television, Seyffart said he expects a batch of spot Bitcoin ETFs to be approved by a January deadline.
The Bitcoin swings punctured - if only briefly - a period of low volatility that reflects a lack of buyer interest. Many investors have deserted virtual coins following last year’s rout and blowups like that of the FTX exchange, whose co-founder Sam Bankman-Fried is on trial for a multibillion-dollar fraud.
Short squeeze
Data from tracker Coinglass shows that $107 million worth of Bitcoin positions, mostly from traders who were betting on lower prices, were liquidated over the past 24 hours.
“Now that we are seeing some progress on the ETF front, I think we will see moves to start to price this in,” wrote Noelle Acheson, author of the Crypto Is Macro Now newsletter. She also anticipates some people will turn to the token to hedge against geopolitical and economic uncertainties.
Developments over spot ETFs have triggered some of Bitcoin’s largest 2023 rallies. In June, the digital asset topped $30,000 after heavyweights including BlackRock and Fidelity Investments sought permission from the SEC to start the funds. The token then retreated to about $26,000.