Summary
Shares of companies linked to cryptocurrencies surged on Tuesday as the price of Bitcoin rose above $45,000, its highest level since April 2021. Expectations are increasing for approval of Bitcoin exchange-traded funds (ETFs) in the United States. The Securities and Exchange Commission (SEC) faces a deadline at the end of January to approve at least one of the numerous applications for Bitcoin ETFs. A Bitcoin ETF would allow ordinary investors to gain exposure to Bitcoin price movements in regular brokerage accounts.
Investor Expectations
Investors increasingly believe that the SEC will approve at least one of the numerous applications for Bitcoin ETFs this week. Previous decisions by the agency were postponed last year, but it now faces a deadline at the end of January to approve the ARK 21Shares Bitcoin ETF from Ark Invest. Many analysts expect the SEC to decide on several Bitcoin ETFs simultaneously to avoid giving one provider a competitive advantage. Giant financial asset firms like BlackRock, Fidelity, and Invesco are among the asset managers whose Bitcoin ETF applications may soon be approved.
Government Oversight Concerns
Federal lawmakers have long opposed the idea of a Bitcoin ETF backed by Bitcoin, citing its exposure to market manipulation and fraud. However, the chances of approval increased significantly last year when a court ruled that the SEC needs more justification to deny Grayscale’s request to convert its Bitcoin trust into a Bitcoin ETF.
Rise in Crypto Company Stocks
Shares of Marathon Digital Holdings Inc. (MARA) rose more than 2% at 12:30 PM Eastern Time, although it fell later in the afternoon on Tuesday. Riot Platforms (RIOT) shares increased by over 3%. MicroStrategy (MSTR), a software developer that has spent billions to become the largest corporate holder of Bitcoin, saw its shares jump over 11% at noon. Both stocks dipped slightly in the afternoon but continued to rise compared to the previous close.
Coinbase Stock Decline
Coinbase (COIN), the largest cryptocurrency exchange in the United States and the preferred custodian for most potential Bitcoin ETF providers, saw its share price decline by over 8% on Tuesday afternoon. However, the stock has returned nearly 400% over the past year.
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Article Source: Bloomberg. “The Countdown for a Bitcoin ETF Decision Is Approaching a Critical Deadline.” (Subscription required).
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Source: https://www.investopedia.com/bitcoin-miners-rise-as-bitcoin-soars-to-21-month-high-8421314
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