The price of bitcoin, breached the $34,000 level to hit its highest since May of the previous year. This happened because people were feeling positive about a type of investment called a ‘bitcoin exchange-traded fund’ or ETF.
On Tuesday, the world’s biggest cryptocurrency was being traded for $34,596.40, which was 4.97% higher than before.
Recent Developments in Cryptocurrency Markets
Another digital currency called Ether, which is the second biggest, also grew in value to its highest point since August.
One of the main reasons bitcoin’s price jumped so much today was because people who were betting it would go down (known as ‘shorting’) lost a lot of money, around $167 million, mostly on exchanges based in other countries.
An analyst from Bitwise Asset Management named Ryan Rasmussen said, “The real catalyst that created the ‘god candle’ earlier today and pushed bitcoin above $34,000 was the $167 million in short liquidations, mainly on offshore exchanges,”’
People were also getting excited about the possibility of a bitcoin ETF. This enthusiasm grew after a court ruled in favor of a company called Grayscale, which specializes in crypto investments. They won against a government agency called the U.S. Securities and Exchange Commission in their attempt to change their big bitcoin fund, the Grayscale Bitcoin Trust (GBTC), into an ETF.
Prospects for a Bitcoin ETF in the United States
Last week, the SEC declined to appeal that ruling by a key deadline, sparking hopes a bitcoin-related ETF may be approved in the next few months.
A bitcoin ETF would allow investors to be part of bitcoin’s price changes without needing to own the actual cryptocurrency.
It’s worth noting that bitcoin is known for its big price swings, which can be hard to predict.
Big financial companies like BlackRock, Invesco, Fidelity, and Grayscale have been working to get approval for bitcoin ETFs. They’ve applied to offer these funds, saying they’re safer investments than buying cryptocurrencies directly, which can be risky and have unpredictable prices.
Nasdaq said that will the U.S. SEC will approve a bitcoin ETF in the United States.
Controversies in the Crypto Industry
The cryptocurrency industry is closely watching these developments, hoping for a revival.
In the past year, this industry has been through troubles and controversies, like FTX going bankrupt and Terraform and its CEO Do Kwon facing charges in February for cheating investors.
In November 2021, the price of Bitcoin reached its highest point ever, surpassing $65,000. But a year later, in November of the following year, its value dropped to about $16,000. This was when FTX, a crypto exchange run by Sam Bankman-Fried, collapsed and declared bankruptcy.
The SEC has been getting tough on cryptocurrency companies. Firms like Coinbase and Ripple have been in legal battles with the SEC. The SEC has accused them of breaking rules related to financial securities.
Coinbase, Ripple, and some other crypto companies have criticized the United States for not being clear about crypto rules. They’ve even talked about leaving the country in response to the SEC’s strict actions.
Bitcoin’s price surpassed $34,000 due to rising enthusiasm for a potential Bitcoin ETF. Ethereum also saw gains. A $167 million short-selling loss propelled Bitcoin’s rise. Optimism grows as the SEC refrains from contesting a crucial decision, potentially allowing a Bitcoin ETF.
However, the crypto industry faces challenges, including legal disputes and regulatory uncertainties. Major financial institutions are seeking Bitcoin ETF approval.