The Future of Bitcoin: Exploring the Soaring Prices and Speculation on ETFs

Bitcoin Leaps to 2023 High on ETF Bets

By | October 24, 2023

Reuters

4:38 AM UTC Updated ago

Bitcoin surge 10% on Monday and a further 5% in Asia trade

Ether and crypto-linked stocks gain

SINGAPORE – Cryptocurrencies extended gains in Asia trade on Tuesday, with bitcoin rallying to an almost 18-month high on speculation that an exchange-traded bitcoin fund is imminent. Bitcoin rose more than 6% to $35,198, its highest since May 2022. It had surged 10% on Monday in its best session for almost a year and its price has doubled in 2023.

Crypto-linked shares such as Coinbase Global (COIN.O) or bitcoin owner MicroStrategy (MSTR.O) rose in after-hours trade. Cryptocurrency ether broke above $1,800.

An exchange-traded fund (ETF) owning bitcoin on behalf of fund investors is seen as a driver of demand because it would allow anyone reluctant to trade crypto markets a means of buying exposure to bitcoin through the stockmarket. Investment giant BlackRock (BLK.N) is among several firms with pending applications for bitcoin funds in the U.S. and speculation on their likely approval was fuelled by BlackRock’s iShares ETF listing on the website of clearing house DTCC.

Anticipation has also grown after reports this month, including from Reuters, that the gatekeeper, the U.S. Securities and Exchange Commission, won’t appeal a court ruling it had been wrong to reject an ETF application from Grayscale Investments.

Impact on the Market

The surge in bitcoin prices and the anticipation of an exchange-traded bitcoin fund have sent shockwaves through the cryptocurrency market. The value of bitcoin has doubled in 2023, with Monday’s session marking the best performance in almost a year. This increase in value has also led to gains in other cryptocurrencies, with crypto-linked shares such as Coinbase Global and MicroStrategy also experiencing significant rises in after-hours trade.

The introduction of an ETF owning bitcoin on behalf of fund investors is being viewed as a potential game-changer for the industry. It would provide an avenue for investors who are hesitant to directly trade in the cryptocurrency markets to gain exposure to bitcoin through traditional stock market channels. This development has sparked speculation and interest in investment giants like BlackRock, who have pending applications for bitcoin funds in the U.S. BlackRock’s iShares ETF listing on the website of clearing house DTCC, along with reports suggesting that the SEC is unlikely to appeal a court ruling rejecting an ETF application, has further fueled market expectations.

Philosophical Discussion on the Value of Bitcoin

The surge in bitcoin prices and the anticipation surrounding the potential ETF approval raise important questions about the nature of value and the role of cryptocurrencies in today’s financial landscape. Steen Jakobsen, CIO at Saxo, highlights the fundamental idea behind asset valuation, stating, “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.”

This perspective leads us to question the intrinsic value of bitcoin and other cryptocurrencies. Are they valuable simply because people believe in their potential and are willing to trade, invest, and hold them? If the advent of an ETF increases the accessibility and usability of bitcoin, does that inherently enhance its value? These are philosophical questions that delve into the nature of value itself and challenge traditional concepts of intrinsic worth.

Editorial and Advice

The recent rally in bitcoin, along with the anticipation of an ETF approval, presents both opportunities and risks for investors. While the surge in prices may be enticing, it is crucial for individuals to exercise caution and make informed decisions when investing in cryptocurrencies. Bitcoin and other digital assets are known for their volatility, and prices can experience sharp fluctuations in a short period.

For those considering investing in bitcoin or other cryptocurrencies, it is advisable to thoroughly research and understand the market dynamics, as well as the potential risks and rewards involved. It is important to diversify one’s investment portfolio and not allocate a significant portion of assets solely to cryptocurrencies. Additionally, consulting with financial advisors who specialize in cryptocurrencies can provide valuable insights and guidance.

Overall, the growing interest and speculation surrounding bitcoin and the potential ETF approval demonstrate the continued evolution and mainstream acceptance of cryptocurrencies. However, investors must approach this market with caution and carefully weigh the risks and rewards before making any investment decisions.

Reporting by Tom Westbrook and Rae Wee in Singapore and Brigid Riley in Tokyo. Editing by Shri Navaratnam

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