BTC hasn’t seen such lofty levels since May 2022, when the cryptocurrency industry was just starting to get hit by scandals.
It was exciting enough for crypto-watchers when bitcoin (BTC) hit $31,000 on Monday.
And then it went straight up. Late in the day, bitcoin hit $32,000, then $33,000, then $34,000 and finally $35,000 in a matter of minutes. Perpetual contracts listed on the Binance exchange were close to $36,000.
The original cryptocurrency was back to levels last seen in May 2022, before the Terra-Luna, Three Arrows Capital, Genesis and FTX debacles soured sentiment to the point where BTC approached $15,000 and some questioned the very survival of the industry.
But sentiment has improved markedly, largely fuelled by the prospect that bitcoin ETFs – which proponents say will make it dramatically easier to buy BTC and potentially vastly expand the pool of potential investors – are on the way.
Grayscale (which, like CoinDesk, is owned by Digital Currency Group) currently runs the largest bitcoin exchange-traded product, but it’s structured as a trust, which has shortcomings. The US Securities and Exchange Commission rejected its attempt to turn the product into a more attractive ETF, but a court recently overturned that rejection and the SEC isn’t appealing, increasing the odds that Grayscale will get an ETF of its own.
And BlackRock, the world’s largest asset manager, is bullish on bitcoin’s prospects and has its own bitcoin ETF filing with the SEC – as have other conventional financial firms. “We’re hearing from clients around the world about the need for crypto,” BlackRock CEO Larry Fink recently told Fox Business.
Fink put crypto in rare company during the interview, saying it will be another haven asset for investors, similar to US Treasuries or gold. “I think crypto will play that kind of role as a flight to quality,” he told Fox Business.
The BlackRock ETF has just appeared on the website of the Depository Trust & Clearing Corp – a key market utility in the US that processes all securities transactions. A normally dull page showed the prospective security with a unique ID number, known as a CUSIP, which all sorts of stocks, bonds and other assets get. Its appearance on this page doesn’t mean the ETF has been approved, but the fact that BlackRock has gone this far in its preparations is certainly a sign of optimism.
More than $167 million in derivatives positions were liquidated in the hour surrounding the rapid rise in BTC late Monday, adding to the daily total of $344 million, according to CoinGlass. Open interest, a metric that tracks the notional value of all derivatives positions, failed to keep pace with bitcoin’s rise, falling from a high of $10.5 billion to $9.4 billion as a result of liquidations, shorts being stopped out and longs taking profits.
There is also an emerging narrative pointed out in Galaxy Digital’s latest market report on the options market. At around $32,500, “options traders need to buy nearly $20 million of BTC for every 1% move up to stay delta neutral,” the report says.
