May 20, 2024
Finance

Bitcoin seesaws near $47,000 as ETF anticipation builds


Bitcoin (BTC) is hovering above $46,000 as anticipation builds for regulatory approval of spot bitcoin exchange-traded funds, an event that could help take the world’s largest cryptocurrency to the masses.

On Monday the price of bitcoin rallied above $47,000 for the first time in nearly two years, hitting $47,200, before falling below $47,000 Tuesday. It is still up roughly 3% in the last 24 hours, trading at roughly $46,500 as of 8 am ET.

Bitcoin rose more than 150% in 2023 and is up roughly 10% since 2024 began, outstripping the performance of major stock indexes.

The Securities and Exchange Commission is expected to rule this week on whether as many as 14 different money managers will be allowed to launch their own spot bitcoin ETFs.

Three of these applicants have told Yahoo Finance they expect the SEC to approve their applications sometime Wednesday and trading could begin as early as Thursday based on that timing. Two of those sources said they expect the SEC decision to be reached after the market closes Wednesday.

These ETFs would allow everyday investors to get exposure to bitcoin (BTC-USD) without having to own it, trading it like they would a stock.

The approvals could also expand widespread acceptance of the world’s biggest cryptocurrency, making bitcoin a potential staple in 401(k)s, IRAs, and pension plans used by everyday people.

The applicants include some of the biggest names on Wall Street, from BlackRock (BLK) to Franklin Templeton (BEN), as well as a number of firms better known in the crypto world.

Photo by: STRF/STAR MAX/IPx 2021 10/21/21 BlackRock headquarters is seen in Manhattan.

BlackRock headquarters is seen in Manhattan. Photo by: STRF/STAR MAX/IPx 2021 (STRF/STAR MAX/IPx)

JPMorgan Chase (JPM) and Goldman Sachs (GS) are among the giant banks that have offered to help some of these money managers create and redeem shares of their new funds.

“We believe the [spot bitcoin] ETF is going to be an incredible tool for unlocking whole new pools of capital employed into bitcoin,” Riot Platforms CEO Jason Les told Yahoo Finance. “This is a rising tide that will lift all boats of the industry.”

Gautam Chhugani, managing director of the research arm for Alliance Bernstein, said his team estimates such financial products will garner $10 billion or more in investment flows through the end of 2024 and “hundreds of billions of dollars” over a two-year period.

That, he added, will help push bitcoin’s price even higher.

Bitcoin is still far from its all-time high of $68,789 set in 2021, a year it benefitted from a period of low interest rates and fiscal stimulus that put excess savings in the pockets of investors.

The market crashed in 2022 as rates rose and the giant crypto exchange FTX collapsed, before digital assets made a comeback during 2023.

Bitcoin’s surprising surge last year coincided with optimism about the arrival of ETFs due to a filing by BlackRock and a court decision in favor of another ETF applicant, Grayscale Investments.

The SEC has in the past denied such applications, arguing the products were vulnerable to market manipulation.

The regulator is also the industry’s most prominent adversary, having filed numerous lawsuits and enforcement actions against key players.

Just this Monday SEC chair Gary Gensler offered some cautionary advice to anyone considering investing in crypto assets.

He said on X, formerly known as Twitter, that “investments in crypto assets also can be exceptionally risky & are often volatile. A number of major platforms & crypto assets have become insolvent and/or lost value. Investments in crypto assets continue to be subject to significant risk.”

The bull case for 2024 is that many of crypto’s biggest problems are now officially in the rear-view mirror after the criminal conviction of FTX founder Sam Bankman-Fried and a guilty plea from Binance CEO Changpeng Zhao.

Investors are optimistic the industry is poised for wider acceptance and regulatory clarity from Washington.

They are also excited about bitcoin’s “halving” in April, a once-in-every-four-years event that reduces the daily issuance of the cryptocurrency by half — and typically results in another bull run.

Any interest rate cuts from the Federal Reserve in 2024 could also boost demand, as could accounting changes expected in December that will make it less adverse for large corporations to keep crypto on their balance sheets.

“We do think that bitcoin goes to $150,000 by 2025,” Chhugani added.

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

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