Bitcoin nears all-time highs on US physically-backed ETF speculation

Bitcoin nears all-time highs on speculation that US regulators will give green light to exchange-traded funds that can track crypto-assets

  • Bitcoin has risen 27.7% in the last month alone and is now trading at $60,330.50
  • Regulators have previously been reluctant to allow for a physically-backed ETF 
  • A greenlight from the SEC could see increased institutional adoption of Bitcoin 

Bitcoin has rallied close to its all-time high price on speculation that US regulators will soon clear the path for physically-backed cryptocurrency exchange-traded funds to begin trading in the country.

Having started 2021 at around $30,000, Bitcoin has risen 27.7 per cent in the last month alone and 97.9 per cent this year, with the cryptocurrency currently trading at $60,330.50.

The current price reflects a six-month high for the volatile asset, which remains slightly off its all-time high price of $64,895 hit in April.

Bitcoin and other cryptocurrencies have rallied in the past month on reports that the SEC will allow the listing of a Bitcoin ETF

Bloomberg reported last week that the US Securities and Exchange Commission will allow the country’s first Bitcoin futures ETF to being trading as soon as this week.

Supporters of Bitcoin believe the move would lead to greater adoption from big institutional investors, many of which are unable to invest directly in the digital coins, and therefore an influx of cash to drive the price even higher.

Analysts say growing concerns about inflation have also pushed Bitcoin’s price higher, with the asset’s limited supply seen as a natural hedge against rising prices.

Other major cryptocurrencies such as Etherium and XRP have also rallied higher in the last month.

Crypto ETFs

The US SEC has been cautious on the prospect of a physical Bitcoin ETF for some time, but that position appears to be shifting.

Investors that have been unwilling or unable to buy the digital assets directly but have still wanted to speculate on the price of Bitcoin or other cryptocurrencies have been limited to so-called ‘blockchain ETFs’.

Rather than tracking the price of the assets like other ETFs might mirror the performance of the FTSE 100, for example, blockchain ETFs invest in the equities of companies involved in the broader crypto economy.

The UK’s Financial Conduct Authority has arguably been even less willing for such regulatory innovation.

Following repeated warnings about the supposed dangers of crypto investing, the FCA took the decision to ban the sale of crypto-derivatives, including exchange-traded products to retail investors from January 2021.

It went a step further this summer by banning crypto exchange Binance from operating the in the UK market.

Having rallied over the last month, Bitcoin remains off its record high of $64,888 in April

Having rallied over the last month, Bitcoin remains off its record high of $64,888 in April

There are, however, blockchain ETFs currently available to UK investors, such as the Invesco Elwood Global Blockchain UCITS ETF, which listed in the UK earlier this year.

For an annual management charge of 0.65 per cent, the ETF offers exposure to 48 global companies affiliated with the blockchain industry, including Verizon and Samsung.

While the US and UK regulators have been reluctant to allow the launch of physically backed crypto ETFs, other global watchdogs have been open to the idea.

London-based Jacobi Asset Management was earlier this year given the greenlight last week from the Guernsey Financial Services Commission to launch a physically-backed bitcoin ETF on the CBOE Europe exchange.

Similarly, in August French regulators approved Melanion Capital to begin offering a bitcoin-tied ETF.