Investors anticipate institutional investment influx as SEC considers approving Bitcoin ETFs
Bitcoin's price has been on a rollercoaster ride recently, with the cryptocurrency briefly surpassing $37,000 amid market optimism over the pending approval of spot Bitcoin exchange-traded funds (ETFs) in the United States. The Securities and Exchange Commission (SEC) has until November 17 to approve several high-profile offerings from prominent U.S. fund managers.
ETFs are a type of investment fund and exchange-traded product, traded on stock exchanges. Bitcoin ETFs would allow investors to gain exposure to Bitcoin without having to buy the cryptocurrency directly. This could potentially bring a significant amount of institutional investment into the Bitcoin market.
Grayscale, the largest cryptocurrency asset manager in the U.S., is reportedly engaging with the SEC to convert its Grayscale Bitcoin Trust to a spot Bitcoin ETF. However, there may be a lag time of a month or more before these offerings actually launch.
Despite the optimism, Bitcoin's price movement has been puzzling traders. The cryptocurrency has gained nearly 30% in October and is up 6.6% in November. However, on-chain monitoring shows that support in the form of strong volume is lacking at current levels.
Traders are also observing whale selling ongoing towards the $40,000 level, which has become a key psychological level. Increasing open interest in Bitcoin futures is also contributing to the market's heating up.
Bitcoin prices surged to nearly $37,000 in Asian trading hours, triggering a "short squeeze" that led to further price increases. Over $50 million worth of bitcoin shorts were liquidated in a four-hour period, with exchanges like BitMEX, OKX, and Binance accounting for a significant portion of the exited positions.
Shares of U.S. crypto-centric companies, including Coinbase and MicroStrategy, also saw gains in pre-market trading. Standard Chartered's venture arm and SBI Holdings are partnering to establish an investment company with $100 million backing to target crypto startups in the UAE.
The SEC has extended the deadline for comments on Bitcoin ETF applications until November 8. It is speculated that the SEC could approve several ETFs between now and November 17, with a requirement that all funds begin trading on the same day. However, both a rule change and a fund's registration statement must be authorized before any Bitcoin ETFs can begin trading.
