ETF expected to be approved, Bitcoin breaks through $45,000

Bitcoin surged to a 21-month high on Tuesday amid growing speculation that the U.S. Securities and Exchange Commission is close to approving the cryptocurrency world’s largest spot exchange-traded fund.

It was up 6% at $45,168.60 at 21:35 ET (02:35 GMT), reaching its highest level since early April 2022. However, trading volume remained light due to the New Year holiday.

Bitcoin’s rise is a continuation of a strong recovery in 2023, which saw the coin’s value rise by more than 100% at around $17,000 at the start of the year.

The cryptocurrency’s recent gains have been driven largely by speculation about the approval of a U.S. ETF that directly tracks the coin’s price. According to Reuters, the SEC has a deadline of January 10 to approve or reject Ark and 21 Shares spot ETF applications. The ruling could set a precedent for several other fund managers to apply for ETFs with similar products.

The Reuters report also said that the SEC will notify other registrants this week whether it will allow them to launch the product before January 10.

BlackRock Inc (NYSE: ), the world’s largest asset management company, has also registered a Bitcoin spot ETF.

The U.S. Securities and Exchange Commission has repeatedly rejected spot applications for Bitcoin ETFs over the past two years, citing concerns that the token’s decentralization and volatility would prevent fund managers from protecting investors from market manipulation. Currently, all Bitcoin ETFs traded in the United States track futures for the token traded on the Chicago Mercantile Exchange.

Grayscale, which currently operates the GBTC ETF (OTC: ), has applied to convert the product into a spot ETF. The company has scored a legal victory with the Securities and Exchange Commission (SEC) after repeated rejections of spot ETFs, prompting the regulator to reconsider Grayscale’s application.

Cryptocurrency advocates believe the approval of a spot ETF will spur massive capital inflows into Bitcoin, as the product allows traders to invest in the token without directly holding the electronic currency.

But analysts warned that the approval might not spark as much of a price jump as expected, especially as the cryptocurrency industry continues to grapple with two years of a massive loss of confidence.

A series of high-profile bankruptcies, coupled with a regulatory crackdown on the world’s largest cryptocurrency companies, have largely dented retail interest in cryptocurrencies. This caused Bitcoin to fall to $15,000 by the end of 2022.

While hopes of ETF approval have fueled the token’s strong recovery so far in 2023, trading volumes are still a fraction of what they were during the 2021 bull run. High interest rates also limit the amount of money flowing into cryptocurrencies.