Bitcoin nears 21-month highs as token surges to $47k

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On Thursday, Bitcoin surged by 2.6 percent, reaching around $47,133 and nearing Tuesday’s 21-month high.

At that time, Bitcoin briefly touched $47,600, the highest since December 2021, before cooling down to $46,600 for the first time since April 2022.

The price increase happened after the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin exchange-traded funds (ETFs) on Wednesday.

The SEC approved 11 spot Bitcoin ETFs, including BlackRock (BLK.N), Ark Investments and 21Shares (ABTC.S), Fidelity, Invesco (IVZ.N), VanEck, WisdomTree, Grayscale, Hashdex, Valkyrie, BZX and Franklin.

Analysts describe the mass ETF approval for Bitcoin as a “historic” moment for the crypto industry. Simon Peters, a market analyst at the trading platform eToro, said, “We’re in for a massive week with one of the most significant events in crypto history taking place, the potential approval of a bitcoin spot ETF.”

Before the spot ETF approval, some analysts had predicted that Bitcoin’s value could increase by over 300 percent by the end of next year. Head of digital asset research at Standard Chartered, Geoff Kendrick, shared his prediction in a research note.

“If ETF-related inflows materialise as we expect, we think an end-2025 level closer to $200,000 is possible. This assumes that between 437,000 and 1.32m new bitcoins will be held in spot US ETFs by end-2024,” Kendrick said.

SEC approval of spot Bitcoin ETFs led to significant gains for other cryptocurrencies like Ethereum (ETH), Cardano (ADA) and Dogecoin (DOGE). ETH, the second-largest cryptocurrency by market capitalization, rose by five percent to $2,653.8, reaching its highest point since May 2022.

“The market’s now quickly moving on to ETH, saying if bitcoin is done, then it’s now very highly likely that the ETH one will get done as well,” Kendrick said.

Smaller tokens like Avalanche, Polkadot and Polygon also traded more than 10 percent higher.

ETF approval opens door for more investors

The SEC’s approval of 11 spot Bitcoin ETFs is significant, allowing investors to gain exposure to the world’s largest cryptocurrency without direct ownership.

U.S.-listed spot crypto ETFs are believed to increase demand for the underlying digital tokens, according to industry participants.

Nick Ruck, chief operating officer of blockchain firm ContentFi Lab said that ”retail and institutional investors no longer need to rely on futures trading or self custody to have exposure to bitcoin, and can use a traditional brokerage account.”

Meanwhile, Marion Laboure, senior strategist at Deutsche Bank Research emphasized that a spot Bitcoin ETF fundamentally offers standardized access to the digital asset as an investment without changing Bitcoin’s core proposition.

“Only time will tell if greater adoption will lead to more transformational outcomes for the crypto ecosystem and financial system. For now, the ETF approval opens a new chapter for bitcoin prices, though volatile conditions are likely to persist,” Laboure said.

Unlike the optimistic views of others, UBS analysts expressed skepticism regarding the industry’s structural outlook. They noted a lack of significant growth in inquiries about cryptocurrency in recent months. There are concerns that traditional institutional participation in crypto might make mainstream finance vulnerable to potential market downturns.

In December, Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), warned that widespread adoption of crypto assets could undermine overall financial stability.

She highlighted concerns about the impact of high crypto adoption on monetary policy, capital flow management and fiscal sustainability due to volatile tax collections.