Bitcoin's price rebound over ETF optimism pauses at $30,000 level

Cryptocurrency rallied for a third straight day on Wednesday as it was boosted by BlackRock's plan to create an exchange-traded fund linked to it

A banner for the first listed Bitcoin-linked exchange-traded fund in the US hangs outside the New York Stock Exchange. AFP
Powered by automated translation

A Bitcoin rally paused around $30,000 as investors assessed a flurry of applications in the US to start exchange-traded funds investing in the token’s spot market, products that regulators there have so far resisted.

The largest digital asset bobbed around the round-number level on Thursday following a 21 per cent surge since BlackRock’s surprise June 15 filing with the Securities and Exchange Commission for permission to launch such an ETF.

The climb has outstripped a 13 per cent jump in an index of the largest 100 virtual coins over the same period.

Bitcoin’s performance has also split from stocks, turning a short-term correlation between the token and the Nasdaq 100 gauge of technology shares negative for the first time since 2021.

Aside from BlackRock – the world’s largest asset manager – Invesco, WisdomTree and Bitwise have submitted similar plans in recent days.

The SEC has resisted allowing such funds, citing risks such as fraud and manipulation in the token’s spot market, but BlackRock’s stature and approach triggered speculation that the agency might be appeased.

BlackRock’s application and investor “expectations of more stimulus in China” to bolster the nation’s ailing economy are supporting Bitcoin, Tony Sycamore, a market analyst at IG Australia Pty, wrote in a note.

‘Dragging’ cryptocurrency higher

Bitcoin edged up less than 1 per cent to $30,130 as of 9.30am in Singapore on Thursday after adding more than 5 per cent in each of the previous two days.

Smaller tokens such as Ether, Cardano and Solana also posted gains.

Bitcoin “has been the standout outperformer in this move higher and feels to be dragging the rest of the crypto complex with it”, said Spencer Hallarn, a derivatives trader at cryptocurrency investment firm GSR.

Cryptocurrency sentiment also got a boost this week from the start of a digital-asset exchange, EDX Markets, backed by companies such as Citadel Securities, Fidelity Digital Assets and Charles Schwab.

Before the latest bout of optimism, an SEC clampdown had sapped sentiment and contributed to depressed liquidity in cryptocurrency markets.

The regulator is suing exchange operators Binance and Coinbase, and – in the process – has designated a series of digital tokens as unregistered securities.

Other hurdles include the prospect of tighter monetary policy and indications that Bitcoin’s rally is getting stretched. A momentum gauge known as the 14-day relative strength index flashed an overbought signal.

Bitcoin has rebounded 82 per cent this year after a rout in 2022 that erased $1.5 trillion from digital assets. The token remains $39,000 below its 2021 peak.

Updated: June 22, 2023, 4:33 AM