Boosted by positive impacts of spot ETF Bitcoin price surges again to $38,000, can it return to the high point of two years ago?

Fueled by Positive Influences, Bitcoin Price Rallies to $38,000 Will it Reach the Record High from Two Years Ago?

Authors: Zhao Yi, Hu Jinhua; Source: Huaxia Times

On the early morning of November 10th, the cryptocurrency market once again began its frenzy, with BTC approaching $38,000 and rising nearly 8%. Shortly after, ETH also started to climb, breaking through $2,100. However, the price of Bitcoin quickly fell afterwards, and as of the time of writing, the latest price of Bitcoin is $36,670.8, down 0.08% in the past 24 hours; while the price of Ethereum remained relatively stable, with the latest price at $2,110.66, down 0.48% in the past 24 hours.

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The reporter noticed that the recent rise of Bitcoin and other cryptocurrencies was still driven by the news of Bitcoin and Ethereum spot ETFs.

In response to this, Wu Gaobin, the co-founder and executive vice president of the China Web3.0 Committee, told Huaxia Times that the main driving force behind this round of Bitcoin price increase is the positive news of spot ETFs. The launch of spot ETFs will help improve the liquidity and transparency of the cryptocurrency market and attract more institutional investors. Therefore, in the short term, the positive impact of the spot ETFs will continue to drive the cryptocurrency market upward. However, from a medium to long-term perspective, the market will return to fundamentals, and investors need to pay attention to industry development and policy risks to judge how long the positive impact of spot ETFs can last.

Ethereum spot ETF may take the lead

According to Bloomberg analyst Eric Balchunas, relevant data shows that the iShares Ethereum Trust by BlackRock has been successfully registered in Delaware, just as the iShares Bitcoin Trust by BlackRock registered in a similar way 7 days before submitting an ETF application to the U.S. Securities and Exchange Commission (SEC). Eric believes that BlackRock has taken the first step in applying for an Ethereum spot ETF.

The reporter learned that in addition to BlackRock, companies such as VanEck, Invesco, and 21Shares have also applied for spot Ethereum ETFs.

Prior to this, Bloomberg analyst James Seyffart wrote that starting from November 9th, the SEC would open a brief window period, which might approve all 12 spot Bitcoin ETFs, including Grayscale’s GBTC. This window period will be open for at least eight days and will end on November 17th.

On the same day, according to an article published by Coindesk, an insider revealed that the SEC has entered into negotiations with Grayscale regarding the details of the company’s application to convert its trust product GBTC into a spot Bitcoin ETF, which could have a significant impact on the cryptocurrency industry. The insider stated that since winning the court lawsuit, Grayscale has been in contact with the SEC’s Trading and Markets Division and the Corporation Finance Division, both of which will play a role in formulating and approving the company’s ETF application.

In response to this news, Craig Salm, Chief Legal Officer of Grayscale, said, “Currently, we are only focused on constructive re-engagement with the Trading and Markets division, and there are still some matters to address.” Salm also pointed out that other applicants (such as BlackRock and Fidelity) seem to have made progress in their negotiations with the SEC regarding their own registrations.

Influenced by recent news, cryptocurrency prices have entered an upward trend since the evening of November 9th. According to CoinGecko, the total market value of cryptocurrencies has risen to $1.45 trillion, with a 24-hour increase of 3.6%, reaching a new high for the year. The total trading volume in the cryptocurrency market in the past 24 hours is approximately $140.171 billion, with BTC’s market dominance at 49.4% and ETH’s market dominance at 17.5%.

According to data from the Hong Kong Stock Exchange, as the price of ETH rose above $2,100, the Southern Vanguard Ether Futures ETF quickly surged and broke through HKD 12. Upon the opening, the price reached HKD 12.67, with a daily increase of 11.24%. The current assets under management have reached $9 million. The Southern Vanguard Ether Futures ETF is a sub-fund of the CSOP ETF series. Unlike traditional exchange-traded funds, its investment objective is to primarily invest in Ether futures on the Chicago Mercantile Exchange.

“The expectation of ETFs is a growing catalyst, which has given this current rise more momentum,” says Josh Gilbert, a market analyst at the trading and investment company eToro. Besides the triggering factor of ETFs, he believes that the halt in interest rate hikes by the Federal Reserve and the upcoming Bitcoin halving event next year have also contributed to this rise.

J.P. Morgan, on the other hand, expresses doubt about the sustainability of the recent surge in the cryptocurrency market. J.P. Morgan analyst Nikolaos says that the cryptocurrency rally “seems overdone.” He also notes that it remains uncertain whether cryptocurrency regulations will be relaxed in the future.

“Given the level of regulation in the cryptocurrency industry, it is currently unclear whether the tightening of regulations will significantly weaken,” Nikolaos says. “The regulations for the U.S. cryptocurrency industry are still pending, and we do not believe that U.S. lawmakers will change their stance due to the two recent legal cases, especially considering the recent memory of the FTX fraud case.”

In response, Yu Fenghui, a specially-invited researcher at the Chinese Financial Intelligence Center, told Huaxia Times that this round of cryptocurrency market growth may be stimulated by positive news about spot ETFs, but it is difficult to determine how long it will last. If the U.S. Securities and Exchange Commission approves these spot Bitcoin ETF applications, it may attract more traditional investors into the cryptocurrency market and further drive the market’s rise. However, market growth is also influenced by various factors, including market sentiment, global economic conditions, and policy changes.

Stay Alert to Risks

Recently, news about spot Bitcoin ETFs has been continuously stimulating the nerves of the cryptocurrency market. Compared to the pending approval of spot ETFs, cryptocurrency futures ETFs are progressing steadily.

On October 9th, 21Shares and ARK Invest announced the launch of a new suite of digital asset ETFs, totaling five ETF products. These ETFs utilize on-chain signals and the cryptographic expertise of the two companies to achieve long-term capital appreciation through strategic investments in Bitcoin and Ethereum futures contracts, as well as the application of blockchain technology. According to the prospectus, these ETFs will be listed on the Chicago Board Options Exchange (Cboe) and will begin trading next week.

In addition, according to official sources, the VanEck Ethereum Strategy ETF is now listed on the Chicago Options Exchange with the trading code EFUT and a total expense ratio of 0.66%. VanEck Ethereum Strategy ETF (EFUT) seeks capital appreciation through investment in Ethereum futures contracts. The fund employs active management and provides Ethereum-related investments through easy-to-use exchange traded tools, without directly investing in Ethereum or other digital assets.

The FTX case has recently concluded, but the market doesn’t seem to be any more cautious. Any news regarding spot ETFs in the past has been able to cause price volatility. “Bitcoin still has a long way to go before it can reach its historical high point of $69,000 in 2021. It’s too early to be optimistic,” said a senior cryptocurrency investor to a reporter from the Huaxia Times.

“Although the news of ETFs has made investors enthusiastic about the cryptocurrency market, cryptocurrency investment still carries high risk. Investors should remain cautious when participating in it.” According to Wu Gaobin, when participating in cryptocurrency investment, investors should fully understand market trends, evaluate their own risk tolerance, and achieve steady asset growth.

In response, Yu Fenghui also emphasizes that cryptocurrency investment carries high risk, including market volatility, manipulation risk, regulatory risk, and security risks. Investors need to be aware of these risks, conduct thorough research and risk management. At the same time, set realistic investment goals and risk tolerance, and develop an investment strategy based on individual circumstances, protecting personal information and fund security using secure and reliable trading platforms and wallets.

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