The price of Bitcoin approached $38,000, a level it last reached during May 2022, in light of a continuous rise thanks to expectations of new demand for the cryptocurrency from exchange-traded funds.
The largest crypto asset rose 6% during the past 24 hours and was trading at $37,843 today at 8:53 am Singapore time, continuing its recovery since the beginning of the year, recording an increase of 129% after declining during 2022. A group of smaller cryptocurrencies also rose, such as Ethereum is ranked as the second largest cryptocurrency.
While the Securities and Exchange Commission yesterday once again postponed issuing a decision regarding the approval of the first American exchange-traded fund that invests directly in Bitcoin, Bloomberg Intelligence expects to give the green light to launch a group of these funds by next January. ETFs will make it easier for institutional investors and small investors to invest in cryptocurrency.
interest rates
Bets on the US Federal Reserve raising interest rates also resulted in a rise in cryptocurrency prices, which can be sensitive to changes in the level of liquidity in financial markets.
“Cryptocurrency valuations could continue to recover if real interest rates peak and we continue to expect progress on getting approvals for spot ETFs in the US market,” Zach Bandel, managing director of research at Grayscale Investments, wrote in a note to clients.
One dilemma for investors is whether Bitcoin's current year's rally actually limits the potential impact of spot ETFs.
Traded funds
Approval could affect the price, but the question is how much cash flow the ETFs will attract, said Si Chung, CEO of crypto-asset index provider CF Benchmarks.
He said the benefits of diversification are driving the discussion about Bitcoin investments given the cryptocurrency's lack of correlation with assets such as stocks over longer periods of time.
