Bitcoin rallies to 2-year high of $49,000 then fizzles as crypto ETFs debut

Bitcoin spot ETFs are the 'biggest event for crypto in years,' says DACFP founder Ric Edelman

Bitcoin rose in volatile trading Thursday after the Securities and Exchange Commission gave the green light for the first-ever spot bitcoin ETFs to trade in the U.S., as expected.

The cryptocurrency was last up 1% at $46,289.15, according to Coin Metrics. Earlier, it punched above $49,000, reaching levels not seen since December 2021. Meanwhile, the price of ether jumped 5% to May 2022 highs. It last traded at $2,594.60.

The ETF approval is a landmark victory for the crypto industry, which first sought to launch a bitcoin ETF more than 10 years ago. Optimism had been building since Grayscale’s big legal win against the SEC in August over the regulator’s refusal to let it convert its popular Bitcoin Trust (GBTC) into an ETF. The flagship cryptocurrency’s price has increased 80% since then.

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Bitcoin erases earlier losses after SEC greenlights bitcoin ETFs

Following the SEC’s decision, bitcoin initially edged lower, as expected by many traders. Although the volume of inflows into the new funds remains to be seen, bitcoin ETFs are still widely expected to drive the demand – and ultimately, price – of bitcoin higher.

“I’d expect to see bitcoin bounce around,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs. “In the past, when ETFs have come to market on a particular theme, one often sees a run up in the underlying asset, a sell-the-news upon launch, and then a slower and steadier rally.”

“I wouldn’t make much of these bitcoin price moves in the next couple of days, but I do think that the approval is going to lead to some longer term price appreciation,” she added. “Trading on an exchange, without a digital wallet, [and] custody similar to any other fund product makes bitcoin exposure far more interesting to those institutions with bullish views on the asset class.”

Ether’s rally propped up other coins in the Ethereum ecosystem. The token tied to Polygon gained 7%, Chainlink advanced 5% and Uniswap rose 6%.

“Now that the bitcoin ETF speculation has come to fruition it looks like traders are rotating to ether to get ahead of the next narrative, an ETH ETF, while ETH looks relatively cheap compared to most other tokens,” said Conor Ryder, head of research at the stablecoin company Ethena Labs.

The SEC is due to give decisions on spot ETH ETF applications beginning in May. BlackRockInvesco, Ark and VanEck are among the firms in line for approval, as well as Grayscale, which is seeking to convert its existing Ethereum Trust (ETHE) into an ETF.

“It’s all about getting ahead of the narratives — bitcoin has rallied versus ether for the last six months thanks to spot ETF speculation, and ETF approval ties a bow on that narrative,” Ryder said. “Meanwhile ETH has struggled to find any momentum and has underperformed compared to most of the smaller Layer 1s,” or blockchain networks, like Solana and Cardano.

Ether lagged bitcoin in 2023, rising just 90% compared to bitcoin’s 157%.

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