The price of first decentralised cryptocurrency Bitcoin surged over 5%, reaching intraday high to $49,012 on Thursday, January 11, after the US Securities and Exchange Commission (SEC) greenlit the establishment of Bitcoin exchange-traded funds (ETFs) by investment firms, signalling a potential revival for the world’s largest cryptocurrency token by market capitalization.
In fact, the daily trading volume for Bitcoin on cryptocurrency exchanges surged to $52 billion, marking the highest level since March 21 of the previous year in New York, as of 7:15 am on Thursday, according to data compiled by CoinGecko.
Bitcoin trading surged to an almost 10-month peak as investors eagerly anticipated the opening bell on Wall Street. This moment marked the widespread availability of the United States’ inaugural exchange-traded funds dedicated to direct investments in the largest cryptocurrency, according to a report by Bloomberg.
Analysts consider introduction of a Bitcoin ETF a significant milestone as it bridges the traditional financial markets with the innovative realm of digital assets.
“This landmark development not only validates the growing importance of crypto but also opens new avenues for institutional investors to participate in the transformative potential of blockchain technology. We have seen that approx 5% to 10% of Gold ownership is through ETFs. With the Bitcoin ETFs, people are expecting a good percentage of Bitcoin ownership to be routed through the ETFs. This makes Bitcoin more accessible to those who have been comfortable trading in the traditional financial markets,” said Nischal Shetty, CoFounder, Shardeum.
Shetty further added, “ If Bitcoin ETFs reach similar figures as gold, then at the current market cap that’s potentially $50B to $80B in new liquidity. Embracing this evolution, we are witnessing the convergence of two worlds, where the decentralized ethos of crypto meets the regulatory framework of traditional finance, paving the way for a more inclusive and resilient financial ecosystem. This is the first digital asset ETF but it won’t be the last.”
This decision by US Securities allows 11 investment firms, including BlackRock, Fidelity, and Franklin Templeton to list Bitcoin-based ETFs on major US exchanges, including Nasdaq and the New York Stock Exchange, as early as Thursday.
“In terms of market impact, the immediate focus is on Bitcoin’s price, which has surged over 60% since early October, driven by the widespread anticipation of the SEC approving spot ETFs in early 2024. This approval further amplifies this positive market sentiment, with expectations of a substantial boost to Bitcoin’s value. This decision is set to trigger heightened trading activity, leading to a significant surge in trading volume. The positive momentum is anticipated to extend beyond Bitcoin to other tokens, signaling a broader resurgence in the overall crypto market,” said Sumit Gupta, co-founder, CoinDCX.
This action is likely to inject fresh vitality into Bitcoin and the broader cryptocurrency sector, which has grappled with falling token values, unsuccessful ventures, and the collapse of exchanges since reaching its zenith in November 2021.
After reaching an unprecedented peak of nearly $69,000 in November 2021, Bitcoin underwent a sequence of declines, dwindling to approximately $16,000 within a year.
“The approval by US SEC to trade Bitcoin ETFs is an encouraging step towards gradual acceptance of digital assets as a mainstream asset class by the global financial ecosystem. This is indeed a historic moment for all the digital asset enthusiasts as it will pave way for further adoption of the world’s largest cryptocurrency through large financial institutions. Digital assets are indeed the flagbearer of alternative asset classes that all modern-day investors should consider taking an exposure on to fulfil their financial goals. The optimism brought about by this move will augur well for the global crypto industry and I believe more Indian investors will make the most of this decision and start including digital assets in their portfolio. I am equally hopeful that this will also facilitate more discussions among the Indian ecosystem and very soon India will have its own crypto ETF,” said Avinash Shekhar, Chief Executive Officer, Pi42.
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Published: 11 Jan 2024, 08:54 PM IST
