The price of bitcoin rose sharply on Wednesday and breached the psychological $30,000 mark for the first time since April, as institutional investors led by BlackRock showed renewed interest in the top cryptocurrency.
Bitcoin climbed 10% to peak at over $30,700 on the day, the first time bitcoin hit the threshold since April 10, according to data from CoinGecko. The market followed the crypto asset’s lead, with altcoins like ethereum seeing gains. As of writing, bitcoin is trading at $30,215.
The increase on Wednesday extended a rally that caused bitcoin prices to soar by more than 21% over the past week. Ethereum, the second most valuable digital asset after bitcoin, gained 17% to $1,906 during the same period.
BlackRock applies for bitcoin ETF
The recent surge in bitcoin prices came just days after BlackRock, the world’s biggest asset manager with $9.5 trillion assets under management, applied to the U.S. Securities and Exchange Commission (SEC) for a spot Bitcoin exchange-traded fund (ETF).
BlackRock’s ETF would own bitcoin that is held in custody by Coinbase, the largest crypto exchange in the United States. Additionally, New York-based investment bank BNY Mellon has been designated as the cash custodian for the ETF.
The SEC approved a futures Bitcoin ETF in 2021, but has rejected several spot ETF applications, citing concerns about safety and the ability of prior applicants to prevent fraud and protect investors. However, observers are upbeat about BlackRock’s bid given the firm’s reputation with the SEC.
According to reports, BlackRock promised to enter into a “surveillance-sharing agreement” with an operator (likely Nasdaq) of a spot trading platform for bitcoin – something that would help mitigate against market manipulation. This, observers say, boosted the firm’s chances of success.
Earlier this week, crypto asset management company CoinShares said there was a shift in sentiment among institutional investors following Blackrock’s application for a spot Bitcoin exchange-traded fund.
In the wake of this application, investment firms Wisdom Tree and Invesco both filed for spot Bitcoin ETFs with the SEC. Meanwhile, EDX Markets, a crypto exchange backed by Fidelity, Charles Schwab and Citadel Securities, launched on June 20.
CEO Jamil Nazarali said the exchange is targeting to attract big money by “bringing the best of traditional finance to cryptocurrency markets.”
Commenting on what many in crypto consider to be Wall Street’s coordinated push into the industry, MicroStrategy founder and Executive Chairman Michael Saylor tweeted: “The window to front-run institutional demand for Bitcoin is closing.”
— Michael Saylor⚡️ (@saylor) June 20, 2023
ETFs allow investors to buy into an asset that tracks the price of bitcoin, but without actually owning the underlying asset directly themselves. Investors may tend to lean towards ETFs because, among other reasons, it’s a much easier way to get into bitcoin.
On June 25, bitcoin fell below $25,000 for the first time since March, amid uncertainty about the future of the market. The drop was triggered by the SEC’s lawsuits against Binance and Coinbase, and the U.S. Federal Reserve’s decision to not hike interest rates this month.
The crypto industry has faced increased regulatory scrutiny since the collapse of FTX and the subsequent arrest of its founder, Sam Bankman-Fried, on fraud charges in December. And while bitcoin nearly doubled in value since then, the price remains 56% off its all time high of $69,000 reached on November 10, 2021.