(Reuters) — Cryptocurrencies extended gains on Tuesday, with bitcoin rallying to an almost 18-month high thanks to speculation that official approval for a bitcoin exchange-traded fund is imminent.
Bitcoin (BTC-USD) rose more than 6% to $35,198, its highest since May 2022. On Monday, it surged 10% in its best session for almost a year, and its price has doubled in 2023.
Crypto-related shares such as exchange Coinbase Global (COIN) and bitcoin holder MicroStrategy (MSTR) rose in after-hours trade. Smaller cryptocurrency ether (ETH-USD) broke above $1,800.
Investment giant BlackRock (BLK) is among several firms with pending applications for bitcoin funds in the US, and speculation about a likely approval was fuelled by BlacRock’s iShares ETF listing on the website of clearing house DTCC.
The prospect of an exchange-traded fund (ETF) owning bitcoin on behalf of fund investors is seen as driving wider demand for the cryptocurrency. It would give those investors reluctant to trade crypto directly a means of buying exposure to bitcoin through the stock market.
Anticipation has also grown after reports this month that the Securities and Exchange Commission (SEC), won’t appeal a court ruling that it had been wrong to reject an ETF application from Grayscale Investments.
“The value of an asset — any asset, basically — is the amount of people using it. So the ETF would make a large audience and increase liquidity,” said Steen Jakobsen, CIO at Saxo.
It was not clear when or why the iShares ETF was added to the DTCC list. DTCC and BlackRock did not immediately respond to requests for comment by phone and email.
Last week, BlackRock denied a report that its ETF was approved, and sources close to the SEC confirmed the application was still pending.
Data on crypto derivatives analysis site Coinglass showed heavy bitcoin short-covering in the last 24 hours.
The move also comes as concern ripples through the broader markets about the risk of Israel’s war with the Islamist group Hamas becoming a wider regional conflict.
Kyle Rodda, analyst at Capital.com, said that the conflict and the emergence of Javier Milei as frontrunner for Argentina’s presidency could also have helped demand for bitcoin, seen by some as a place to store wealth during times of crisis.
(Reporting by Tom Westbrook and Rae Wee in Singapore and Brigid Riley in Tokyo.; Editing by Shri Navaratnam)
