On Tuesday, shares of companies closely tied to the cryptocurrency industry experienced a notable upswing, coinciding with Bitcoin’s surge above $45,000, marking its highest level since April 2021. This surge is attributed to growing anticipation of the approval of a spot exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC).
Investors are increasingly optimistic that the SEC, facing a January 10 deadline, will approve one or more of the numerous spot Bitcoin ETF applications under consideration. Notably, Ark Invest’s ARK 21Shares Bitcoin ETF is among those awaiting a decision. Analysts expect the SEC to make simultaneous decisions on multiple ETFs to prevent giving a competitive advantage to a single provider. Prominent asset managers, including BlackRock, Fidelity, and Invesco, have pending ETF applications that could potentially see approval soon.
While federal regulators have historically expressed concerns about a Bitcoin-backed ETF due to susceptibility to fraud and market manipulation, the odds of approval increased last year after a court ruled that the SEC needed stronger grounds for denying Grayscale’s application to convert its Bitcoin trust into an ETF.
During the surge in Bitcoin’s price, Marathon Digital Holdings Inc. (MARA) witnessed a more than 2% increase around midday, and Riot Platforms (RIOT) gained over 3%. MicroStrategy (MSTR), a software developer that has invested significantly in becoming Bitcoin’s largest corporate holder, experienced a more than 11% jump. However, these gains tapered off later in the afternoon.
Conversely, shares of Coinbase (COIN), the largest U.S.-based cryptocurrency exchange and a preferred asset custodian for many potential ETF providers, were more than 8% lower on Tuesday afternoon. Despite this, the stock has delivered an impressive return of nearly 400% over the past year. The market’s response reflects the nuanced dynamics within the crypto industry as different players react to the evolving regulatory landscape and market developments.
