Improved prospects for purchasing Bitcoin funds trading on stock exchanges rather than on less-regulated cryptocurrency platforms briefly pushed the price of Bitcoin above US$35,000 on Tuesday for the first time since May 2022, before easing to around $34,000 on Wednesday, say analysts.
Notoriously volatile, Bitcoin has more than doubled in value this year and shot up again after news emerged that the BlackRock Inc exchange-traded fund (ETF) for Bitcoin appeared on a list controlled by the Depository Trust and Clearing Corp (DTCC), a Nasdaq-operated clearing house for stocks and ETFs, said Mana Khanijou, head of commercial and investment consulting at Merkle and Elkrem Capital.
BlackRock, one of the world's largest asset managers, registered a Bitcoin spot ETF in June, which is pending approval. The company is the largest provider of ETFs in the world, managing trillions of dollars of assets.
Typically a bank or broker-dealer purchases the creation units, Bitcoin in this case, in exchange for ETF shares. These shares can then be traded on the open market on the ETF's launch day.
BlackRock also obtained a Committee on Uniform Security Identification Procedures (CUSIP) number for its iShares Bitcoin spot ETF. This unique nine-digit ID number is required for securities traded on public markets in the US and Canada.
The US Securities and Exchange Commission (SEC) is reviewing applications from several large companies, including Fidelity Investments, ARK Invest, VanEck and Invesco, which are all eager to bring similar products to the US market.
"Bitcoin remains an alternative asset that a large group of investors do not have enough knowledge about, and thus they don't have enough confidence yet to invest in it," said Mr Mana.
"The total market value of digital assets globally is $1.3 trillion, or 10 times less than the value of the gold market. That clearly shows digital assets have ample room to grow in the future."
Bitkub, Thailand's leading digital asset trading company, said the price of Bitcoin rose on news of the Bitcoin ETF, but trading of such an ETF still requires SEC approval in the US, with analysts predicting the fund will be traded by 2024.
The SEC delayed its decision on these ETF applications twice, with the next round of deadlines set for January 2024. Some investors may be waiting for the price of Bitcoin to halve.