Bitcoin hits 1-1/2-year high on ETF speculation

Expectation of a bitcoin ETF has increased following reports this month that the U.S. SEC would not appeal a ruling that it was wrong to refuse an application from Grayscale Investments

Bitcoin surged 10% to 1-1/2 year highs on Monday, and crypto-linked stocks followed it higher as speculation about the possibility of a bitcoin ETF drove enthusiasm about the sector and prompted short-sellers to quit positions.

The world’s largest crypto currency was last at $32,833 after trading at $34,283. Crypto-related shares like exchange Coinbase Global, miner Marathon Digital bitcoin holder MicroStrategy increased steeply and were making further gains in after-hours U.S. trade.

Smaller rival ether also soared 6%, reaching a two-month peak and breaking above its 200-day moving average.

Expectation of a bitcoin ETF has increased following reports this month that the U.S. SEC would not appeal a ruling that it was wrong to refuse an application from Grayscale Investments.

The prospect of a spot bitcoin exchange-traded fund is seen driving wider flows into the crypto currency, as it would let a broader set of investors buy exposure without directly trading it.

The market is doing its best to front-run the approval of a physical bitcoin exchange-traded fund, with consensus being that it will occur sometime in the next three months, if not sooner, said Matthew Dibb, CIO at crypto asset manager Astronaut Capital.

BlackRock, VanEck, WisdomTree, Fidelity, Bitwise and Invesco all have pending bitcoin ETF applications. Blackrock’s iShares ETF is on a list of exchange-traded funds on the website of clearing house DTCC, driving the latest round of speculation that its approval is imminent.

It was not clear when or why the exchange-traded fund was on the list. Last week BlackRock rejected an erroneous news that the ETF was approved and sources close to the Securities and Exchange Commission confirmed the application was still pending.

Dibb also pointed to data on crypto currency derivatives analytics platform Coinglass, which showed heavy liquidation of bitcoin short positions during the last 24 hours.

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