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Bitcoin and Ethereum Surge Amid ETF Approval Prospects

Last updated on November 16, 2023

Bitcoin approached the $38,000 mark, reaching its highest point since May 2022 early Thursday, buoyed by the anticipation of regulatory approval for a bitcoin exchange-traded fund (ETF) in the U.S. Concurrently, Ethereum experienced a surge in value following indications of BlackRock’s registration for an Ethereum ETF. This led to a notable upswing in cryptocurrency prices and associated stocks on Thursday.

The U.S. Securities and Exchange Commission (SEC) initiated discussions with Grayscale Investments (GBTC) regarding its application to convert its bitcoin trust into a spot bitcoin ETF. An appeals court decision in October mandated the SEC to review Grayscale’s ETF application, challenging the previous rejection as arbitrary.

Simultaneously, the SEC opened a brief window for potential approval of 12 current spot bitcoin ETF applications, a process set to continue until November 17. Noteworthy participants, including BlackRock, Bitwise, VanEck, WisdomTree, Invesco, Fidelity, and Valkyrie, faced delay orders from the SEC. The regulator has until January 10 to decide on nine of these ETF applications, with a 90% probability of approval by that date, according to Bloomberg forecasts.

In a related development, approximately $86.8 million in bitcoin short positions were liquidated in the past 24 hours, accompanied by a short squeeze as bitcoin surpassed $36,000.

Ethereum experienced a rally in prices on Thursday, driven by indications that BlackRock had registered an iShares Ethereum Trust in Delaware. This move follows BlackRock’s pattern of registering trusts before submitting ETF applications to the SEC. Ethereum’s potential approval for a spot ETF, similar to bitcoin, could attract institutional interest, offering a regulated vehicle for participation in the Ethereum ecosystem. Additionally, as a proof-of-stake asset, Ethereum’s approval could lead to increased demand for staking services, enhancing network scalability and security.

As of late Thursday, Bitcoin traded above $36,600, reaching an intraday peak of $37,960, its highest level since May 2022. In the same period, Ethereum surged back above $2,000, marking its highest value since mid-July and registering a 72% gain in 2023.

Significant Terms:

  • Bitcoin Exchange-Traded Fund (ETF): A type of investment fund and exchange-traded product, structured to track the performance of Bitcoin.
  • Spot Bitcoin ETF: An ETF that directly holds Bitcoin, allowing investors to gain exposure to the cryptocurrency’s price movements.
  • U.S. Securities and Exchange Commission (SEC): A regulatory body overseeing the securities industry to protect investors and maintain fair and efficient markets.
  • Short Squeeze: A situation where a rapid increase in the price of an asset forces short sellers to cover their positions, contributing to further price increases.
  • Proof-of-Stake (PoS): A consensus algorithm in blockchain networks where validators are chosen to create new blocks and confirm transactions based on the amount of cryptocurrency they hold and are willing to “stake” as collateral.
  • Staking Services: In the context of cryptocurrencies, the process of participating in the proof-of-stake consensus mechanism by holding and “staking” a certain amount of cryptocurrency to support network operations in exchange for rewards.
  • Intraday: Referring to events or fluctuations occurring within a single trading day.

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