Bitcoin (^BTCUSD) today is trading -0.9% lower, but has retraced only a small part of Tuesday’s rally of +5.43% and Wednesday’s rally of +6.45%. Bitcoin on Wednesday posted a new 2-1/4 month high and stopped just shy of April’s 1-year high. Bitcoin is down by -56% from its record high of $68,992 posted in November 2021.
This week’s bitcoin rally was sparked mainly by a spate of new crypto ETF applications to the SEC. Invesco (IVZ) and Wisdom Tree (WT) this week filed for spot bitcoin ETFs.
This week’s ETF applications followed Blackrock’s (BLK) application to the SEC on June 15 for a spot bitcoin ETF. The market’s thinking is that Blackrock, the world’s largest asset manager, might know something positive about crypto that would prompt the SEC to accept its application where all others have so far failed. Bloomberg reports that the SEC has so far rejected some 30 applications for spot crypto ETFs.
The SEC has so far refused to approve a spot bitcoin ETF because of the potential for market manipulation, fraud, and theft. There is also the fundamental problem of whether digital assets should be fully-regulated securities. So far, the SEC has only approved crypto ETFs that are based on crypto futures, meaning there is already a layer of futures regulation in place before the ETF wrapper takes over.
The crypto market has recently been on the defensive after the SEC cracked down on exchange operators Binance and Coinbase (COIN) and said it plans to treat at least some digital assets as regulated securities. The failure of the FTX and allegations of widespread fraud also cast a dark shadow over the sector.
Nevertheless, crypto investors this week have also been heartened by the start of the digital-asset exchange EDX Markets, which is backed by heavy weights such as Citadel Securities, Fidelity Digital Assets, and Charles Schwab (SCHW).
At the very least, the recent ETF applications by heavy-weight financial firms indicate their confidence that the crypto sector will survive the SEC’s regulatory crackdown. The recent moves also suggest that Wall Street firms believe there is long-term institutional demand for crypto.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
