Bitcoin pushed up by BlackRock move

Bitcoin, the disruptive cryptocurrency aiming to challenge traditional finance, has experienced a resurgence with the backing of major Wall Street players. Over the past 11 days, the original digital coin has surged 20% to reach a two-month high of $30,182. This rally was sparked by BlackRock, the world’s largest asset manager, filing for a spot bitcoin exchange-traded fund (ETF) in the United States, despite previous rejections by the Securities and Exchange Commission (SEC). The prospect of a regulated ETF providing exposure to bitcoin without the need for custody has rejuvenated the market.

Bitcoin’s market value now represents almost half of the total $1.1 trillion cryptocurrency market, the highest share in over two years. At the beginning of the year, its share stood at around 40%, up from a low of 34% in 2018. The filing of the ETF by BlackRock, a respected player in the industry, signals adoption and interest from global leaders, attracting the attention of institutional investors and traders alike. In addition to BlackRock, other firms such as Invesco and WisdomTree have also reapplied for spot bitcoin ETFs after previous rejections by the regulator.

While optimism surrounds the potential approval of a spot bitcoin ETF, some remain cautious about the lack of regulatory clarity in the crypto market. Investors are uncertain about the rules governing digital assets and are hesitant to enter the space. The current options for US investors seeking exposure to cryptocurrencies on stock exchanges are limited to futures-based ETFs, which track bitcoin futures contracts. These funds come with additional costs associated with rolling over contracts on settlement days, making a spot bitcoin ETF a potentially more cost-effective alternative.

Crypto investment products still constitute a small fraction of the overall market, accounting for less than 2% of the total crypto market, excluding grantor trusts. The introduction of futures-based ETFs, such as BITO, the first bitcoin futures ETF, has spurred the launch of similar products. However, a survey of international professional investors indicated a growing interest in single-cryptocurrency exchange-traded products, with 48% considering investment compared to 37% interested in direct investment. The allure of bitcoin as a potential addition to investment portfolios, including retirement funds, may attract both institutional and retail investors, leveraging the reputation and influence of firms like BlackRock.

Despite the recent legal actions taken by the SEC against major crypto exchanges Coinbase and Binance, the filing for a spot bitcoin ETF has breathed new life into the market. Bitcoin’s value has surged, reigniting interest in the digital currency and paving the way for potential advancements in the regulatory landscape surrounding cryptocurrencies.

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