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Bitcoin soars as SEC set to allow ETF

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Speculation that the US SEC will approve bitcoin ETFs is gaining more traction. Photo: Reuters
Speculation that the US SEC will approve bitcoin ETFs is gaining more traction. Photo: Reuters

Bitcoin is ending the week on a high note, inching close to its all-time high, as investors become confident that the US Securities and Exchange Commission (SEC) will approve the launch of an exchange-traded fund (ETF) based on the crypto’s futures contracts.

Bitcoin (BTC-USD) was up 2.5% Friday morning, to trade at $58,884 (£42,877). Its all-time high is roughly $64,000, which it had hit in April.

Ethereum (ETH-USD), the world’s second biggest crypto by market cap, was up about 4% to trade at $3,753.

There has been much speculation on the SEC approving bitcoin ETFs.

It has not made any comment, but investors were given hope by a tweet posted by the SEC's investor education office on Thursday that said “before investing in a fund that holds Bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits".

Bloomberg also reported that the regulator “is poised to allow the first US bitcoin futures exchange-traded fund to begin trading in a watershed moment for the cryptocurrency industry,” citing people familiar with the matter.

Naeem Aslam, chief market analyst at AvaTrade, said “it is almost certain that the SEC is going to allow the first bitcoin ETF" adding that the community has been waiting for this since 2018. 

"The reflection of this optimism can be seen by looking at the bitcoin price.”

Bitcoin was up on Friday morning. Chart: Yahoo Finance UK
Bitcoin was up on Friday morning. Chart: Yahoo Finance UK

Kunal Sawhney, CEO of equities research firm Kalkine, told Yahoo Finance UK: "The cryptocurrency market has been quite vibrant this week with the world’s highest populated crypto-asset spearheading the gains after decided to introduce exchange-traded funds on the futures contract of US bitcoin futures.”

“The apparent move by the US SEC has propelled a fresh wave of interest from global investors who believe that increasing recognition of the crypto ecosystem will certainly pave the way for higher participation from the big-ticket market players," he added.

Watch: What are the risks of investing in cryptocurrency?

Read more: FTSE 100 surges to highest level since February 2020

Sawhney believes the roll-out of the ETF on the conventional exchanges is likely to increase chances of increased supervision by the SEC, thereby reducing the chances of extreme price fluctuations.

And he expects bitcoin to "comfortably breach" its previous record high of $64,895 by the end of the year. Some analysts have predicted it could go as high as $100,000.

But he also warned that the proportion of Asia’s investors has diminished after the crackdown by Chinese regulators and authorities over the corporations facilitating the trading in cryptocurrencies.

Meanwhile, Aslam said “we are also seeing serious momentum in ethereum" as traders know it is the next cryptocurrency which is going to see significant increase in value, as institutions become serious about it.

Watch: What is bitcoin?

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