As the market closely watches developments surrounding the potential approval of a Bitcoin spot exchange-traded fund (ETF) for BlackRock by the U.S. Securities and Exchange Commission (SEC), shares of crypto-related companies are seeing major gains.
Coinbase, MicroStrategy, and Marathon Digital saw their stock prices rise by more than 15% following Bitcoin’s price surge past the $34,000 mark. This surge in Bitcoin’s price can be attributed to the optimism surrounding the possibility of a Bitcoin spot ETF.
Bitcoin’s Remarkable Ascent
As the crypto market reacted to the potential approval of a Bitcoin spot ETF, Bitcoin’s price experienced a remarkable ascent, topping at $35,000 at one point. This surge in price began when the proposed BlackRock ETF appeared on the website of the Depository Trust & Clearing Corp. (DTCC), an essential U.S. market utility.
“Authorized participants will have to buy Bitcoin if a spot ETF gets approved in order to create shares for an eventual ETF, which will result in significant flows to buy an increasingly illiquid supply of Bitcoin.” – James Butterfill, CoinShares head of research
The spike in Bitcoin’s price had a positive impact on the broader financial sector. Stock prices of Coinbase, MicroStrategy, and financial services firm Galaxy Digital all rose. MicroStrategy, in particular, has a substantial balance sheet holding more than 158,000 Bitcoin.
Bitcoin mining companies, which are typically more susceptible to Bitcoin price fluctuations, also benefited from the BTC price hike. Marathon Digital (MARA) and Riot Platforms (RIOT) saw their stock prices rise by over 15%. Even the S&P 500 and Nasdaq equity indexes snapped a five-day losing streak.
Bitcoin spot ETF Approval: Brewing Expectations
The expectations of a Bitcoin spot ETF approval have been brewing for some time, especially after financial giants like BlackRock submitted their applications to the SEC. There is a significant shift in investors’ outlook for Bitcoin if its rally extends as far as $40,000.
“If Bitcoin’s rally extends as far as $40,000, there will be a significant shift in investors’ outlook for Bitcoin.” – James Butterfill, CoinShares head of research
“Any detriment to the early ’24 timeline for Spot ETFs could have a negative impact on prices and we could be trading in the high 20s again. Although, given recent events, this scenario seems increasingly unlikely.” – James Butterfill, CoinShares head of research
The market was quick to respond to uncertainties around the Bitcoin spot ETF. Following Butterfill’s cautionary remarks, the BTC price experienced a 3% dip. It dropped from around $34,500 to $33,500 in a matter of minutes due to the FUD (Fear, Uncertainty, Doubt) caused by the removal of BlackRock’s iShares Bitcoin Trust ticker $IBTC from the DTCC list on its website.
In light of these developments, it becomes clear that the cryptocurrency sector is not operating in isolation. A potential Bitcoin ETF approval by the SEC could be a pivotal moment, not just for Bitcoin but for the entire industry. The recent price rallies in both Bitcoin and associated company stocks show that traditional financial markets are becoming more entwined with digital assets.
While the market response has been overwhelmingly positive, it has also proven to be fragile, given its swift reaction to even a hint of uncertainty.
