“Bitcoin stocks soar to new heights as anticipation for ETF approval intensifies, triggering a thrilling crypto short squeeze.”
Shares of companies with substantial cryptocurrency holdings saw significant gains in Tuesday’s trading session. This surge was driven by renewed optimism for the introduction of spot bitcoin exchange-traded funds (ETFs), which sparked a short squeeze in derivatives based on the original digital asset.
Bitcoin itself reached $33,800 in New York afternoon trading, doubling its value for the year and accounting for 51% of the cryptocurrency market’s $1.3 trillion value, the highest since 2021.
The potential for ETFs based on actual bitcoin holdings has become a focal point for cryptocurrency trading and equities closely tied to digital assets. The belief is that easily tradable ETFs will increase demand for bitcoin and other cryptocurrencies.
Companies like Microstrategy, which functions as a closed-end bitcoin fund, saw a 13% gain, while Marathon Digital and CleanSpark, both involved in bitcoin mining and crypto-services respectively, experienced double-digit increases. Existing ETFs, such as VanEck Bitcoin Strategy ETF and ProShares Bitcoin Strategy, also saw gains of 7%.
The US Securities and Exchange Commission (SEC) has been resistant to approving ETFs based on the price of bitcoin due to concerns about manipulation. However, the SEC recently let pass a deadline to appeal a court order requiring it to consider Grayscale’s application to convert its existing bitcoin trust to an ETF. The agency has also begun negotiations with companies looking to launch new ETFs.
Market participants are now positioning themselves for bitcoin ETFs to be approved in early 2024. The recent surge in bitcoin’s value was further fueled by a short squeeze, with short sellers closing their bearish positions and boosting the price even more.
Overall, the outlook for bitcoin and cryptocurrency remains uncertain. While recent price movements have been positive, it is unclear whether this is the start of a sustained upward trend or just a temporary surge.