The price of Bitcoin (^BTCUSD) on Monday surged +10% to a 2-1/4 month high on an erroneous report that BlackRock, the world’s biggest money manager, had won approval from the Securities & Exchange Commission (SEC) to launch a spot Bitcoin exchange-traded-fund (ETF) that allows investors to invest directly in the token. Bitcoin prices soon gave up more than half of Monday’s advance after BlackRock said its Bitcoin ETF application remains under review.
BlackRock is among about a dozen companies seeking to offer the first U.S. spot Bitcoin ETFs amid speculation the SEC may soon end its opposition to the products. Many rumors and false headlines have recently jolted Bitcoin prices. Bloomberg Intelligence expects the SEC to approve several Bitcoin ETFs before a January deadline and said Monday’s spike in Bitcoin prices “was a dry run for what’s going to happen if these things actually do get approved.”
Following last year’s rout in Bitcoin to a 3-year low last November, many investors liquidated their cryptocurrency holdings and bet on even lower prices as they shorted Bitcoin. Monday’s brief surge in Bitcoin forced many to cover their losing short positions as data from Coinglass showed that $95 million of Bitcoin positions, mostly from traders who were betting on lower prices, were liquidated in the past 24 hours.
Many investors have tried to jump into bitcoin early on hopes the SEC would soon approve Bitcoin ETFs, only to be disappointed. In July, Bitcoin spiked up to a 16-month high after BlackRock and Fidelity Investments sought permission from the SEC to begin their own Bitcoin ETFs. Also, a U.S. court ruling in August potentially paved the way for the $17.7 billion Grayscale Bitcoin Trust to convert into an ETF. However, Bitcoin prices fell back as the SEC has thus far refused to approve spot Bitcoin ETFs, citing risks such as fraud and manipulation in the token’s spot market.
The likelihood and timing of an approval of spot Bitcoin ETFs remains uncertain. The SEC has permitted ETFs holding Bitcoin and Ether futures but has held steadfast in not approving a spot Bitcoin ETF. Following Monday’s brief spike in Bitcoin prices, the SEC tweeted on X, formerly known as Twitter, a warning that people need to be “careful what you read on the internet” and that “the best source of information about the SEC is the SEC.” Mounting speculation that the SEC will approve a Bitcoin ETF has boosted Bitcoin 70% this year to nearly $30,000, but it remains well below the 2021 all-time high of almost $69,000.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
