Bitcoin briefly surged to $47,000 (874,867 South African Rand) in a subdued response to the US Securities and Exchange Commission’s approval of exchange-traded funds (ETFs) that directly invest in the cryptocurrency. However, traders are cautious, waiting to see the level of investment in these new products.
The largest cryptocurrency steadied at around 857,243 South African Rand, showing a muted reaction to the news. Some see the SEC decision as a significant step that broadens the investor base for digital assets. Bitcoin had already experienced a 160% surge over the past year in anticipation of ETFs and looser monetary policy.
Other major cryptocurrencies had mixed performances. Ether, the second-largest token, stood out with a 9% gain over the past 24 hours, reaching approximately 48,084 South African Rand. This increase was driven by expectations that it would be the focus of the next wave of spot crypto ETFs in the US.
Market observers had speculated about the possibility of a Bitcoin pullback after the green light for spot ETFs, as investors might decide to take profits from its months-long rally. Some believe that the news had already been “priced in,” and attention is now focused on the inflow of funds into these ETFs.
The SEC approved ETFs from asset management giants like BlackRock, Invesco, and Fidelity, as well as products from smaller competitors like Valkyrie. However, it’s expected that most of the money initially entering Bitcoin ETFs will come from reallocations of existing Bitcoin exposure.
The SEC’s opposition to spot Bitcoin ETFs had persisted for over a decade, with Chair Gary Gensler expressing concerns about fraud and misconduct in the crypto industry. However, a legal fight lost by the SEC against Grayscale Investments last year raised expectations that the regulator would eventually approve spot ETFs. Grayscale is now converting its 1.71 billion South African Rand Grayscale Bitcoin Trust into an ETF.
While approving the spot Bitcoin ETP shares, Gensler emphasized that the SEC did not endorse Bitcoin and urged investors to remain cautious about the risks associated with cryptocurrencies.
Crypto supporters argue that Bitcoin serves as an inflation hedge and a store of value, which can enhance the risk-adjusted performance of diversified portfolios. The approval of spot Bitcoin ETFs is seen as a significant moment in the mainstream adoption of cryptocurrencies, with many investors seeking to diversify their portfolios through these ETFs.
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