Bitcoin tops $60,000 and nears record high on growing US exchange-traded fund hopes

US approval for Bitcoin ETF expected to speed up the mainstream adoption of digital assets

Powered by automated translation

Bitcoin, the world's largest cryptocurrency, hit $60,000 for the first time in six months on Friday, nearing its record high, as traders grew confident that US regulators would approve the launch of an exchange-traded fund (ETF) based on its futures contracts.

Cryptocurrency investors have been waiting for approval of the first US ETF for Bitcoin, whose recent rally is being fuelled in part by anticipation of such a move, which is seen as speeding up the mainstream adoption of digital assets.

Bitcoin rose 4.5 per cent to its highest level since April 17, and was last at $59,290. It has risen by more than half since September 20 and closing in on its record high of $64,895 hit in April.

The US Securities and Exchange Commission (SEC) is expected to allow the first US Bitcoin futures ETF to begin trading next week, Bloomberg News reported on Thursday.

"It is widely expected that Q4 will see significant progress around a Bitcoin ETF in the US," said Ben Caselin, head of research and strategy at Asia-based cryptocurrency exchange AAX.

Friday's moves were spurred, he said, by a tweet from the SEC's investor education office.

"ETFs open up a raft of avenues for people to gain exposure, and there will be a swift move to these structures," said Charles Hayter, chief executive of data company CryptoCompare, which tracks ETF products.

"It reduces the frictions for investors to gain exposure and gives traditional funds room to use the asset for diversification purposes."

Several fund managers, including the VanEck Bitcoin Trust, ProShares, Invesco, Valkyrie and Galaxy Digital Funds have applied to launch Bitcoin ETFs in the United States. Crypto ETFs have been launched this year in Canada and Europe.

"We have seen more institutional build-up, especially in the past few weeks, than we have at any time since the [Bitcoin price] crash back in April," said Noelle Acheson, head of market insights at Genesis Global Trading.

We have seen more institutional build up, especially in the past few weeks, than we have at any time since the [Bitcoin price] crash back in April
Noelle Acheson, head of market insights at Genesis Global Trading

SEC chair Gary Gensler previously said the crypto market involves many tokens which may be unregistered securities and leaves prices open to manipulation and millions of investors vulnerable to risks.

The Bloomberg report, citing people familiar with the matter, said that proposals by ProShares and Invesco are based on futures contracts and were filed under mutual fund rules that Mr Gensler has said provide "significant investor protections".

The SEC did not immediately respond to a request for comment on the Bloomberg report.

Updated: October 18, 2021, 7:00 AM