Cryptocurrencies, including Bitcoin, saw gains on Tuesday as the digital asset market maintained its momentum. The surge in optimism is driven by the growing anticipation that regulatory authorities will soon give the green light to spot Bitcoin exchange-traded funds (ETFs), a development that the crypto world has eagerly awaited.
In the past 24 hours, the price of Bitcoin has increased by 2.5%, nearing the $28,450 mark. It has managed to maintain a steady position above the $26,000 range, which it had largely occupied for the past two months. During this period, sentiment around the cryptocurrency remained stagnant, and volatility and trading volumes reached historically low levels. Bitcoin even briefly surpassed $30,000 on Monday following a misleading news report that falsely claimed the Securities and Exchange Commission had approved a spot Bitcoin ETF. This incident likely marks just the beginning of heightened volatility associated with ETFs.
Katie Stockton, managing partner at the technical research firm Fairlead Strategies, expressed her optimism, stating, “We upgrade our short-term bias to bullish. A decisive breakout by Bitcoin would target secondary long-term resistance near $35,700. Long-term support remains intact near $25,200. Long-term momentum is improved for Bitcoin.”
Bitcoin’s recent rally began on Friday after news broke that the SEC had decided not to challenge a federal court ruling that cleared the way for Grayscale, a digital asset manager, to transform its Bitcoin trust into an ETF. The prospect of a spot Bitcoin ETF, which would directly hold the cryptocurrency instead of futures, has been a significant catalyst for the crypto market since the summer when mainstream financial giants like BlackRock applied for SEC approval.
The regulatory approval of such ETFs is widely anticipated to rejuvenate the crypto markets and trigger a fresh wave of investment in Bitcoin. However, it is important to note that there may be uncertainties and challenges on the path to trading a spot Bitcoin ETF. Nevertheless, traders are growing increasingly optimistic that the SEC will grant approval, particularly for the conversion of the Grayscale Bitcoin Trust.
This optimism is evident in the narrowing of the Grayscale discount. The asset manager’s trust had been trading at a discount to the net asset value of the Bitcoin it holds for nearly two years. However, this discount is now diminishing, standing below 15% on Tuesday, down from around 19% at the beginning of the month and the narrowest it has been since late 2021.
In addition to Bitcoin, Ether, the second-largest cryptocurrency, rose by 1% to reach $1,590. Smaller cryptocurrencies, or altcoins, showed mixed performance, with Cardano trading flat and Polygon gaining 1%. Among meme coins, Dogecoin saw a gain of less than 1%, while Shiba Inu experienced a 1% decline.