Bitcoin Surges to $49,000 For The First Time Since December 2021

Bitcoin experienced a surge, surpassing $49,000, marking its highest point since December 2021. This spike coincided with the commencement of trading for the first US exchange-traded funds (ETFs) directly investing in the cryptocurrency. The US Securities and Exchange Commission’s approval of spot Bitcoin ETFs fueled the momentum.

In the initial 45 minutes of trading, over $1.4 billion was exchanged across all 11 ETFs. Notably, the Grayscale Bitcoin Trust recorded $634 million in transactions. This development reflects a significant institutional influx into the market, indicating a promising outlook for the coming year, as noted by Chris Newhouse, a DeFi analyst at Cumberland Labs.

However, the SEC’s historical resistance to spot Bitcoin ETFs, coupled with Chair Gary Gensler’s criticisms of the crypto sector, has been a long-standing challenge. Gensler’s concerns about fraud and misconduct within the industry led to regulatory crackdowns, especially following the 2022 market rout and incidents like the FTX exchange bankruptcy.

The SEC’s loss in a legal battle against Grayscale Investments in the previous year sparked speculation about the approval of spot ETFs. Grayscale Bitcoin Trust, with approximately $29 billion in assets, successfully transformed into an ETF.

The approval of spot Bitcoin ETFs represents a pivotal moment for financial advisors, requiring them to form opinions on this asset class. While some may still refrain from recommending it to clients, the availability of a regulated product opens the door to more consistent interest and investment in the asset class, according to Sui Chung, CEO of CF Benchmarks.

Despite the positive momentum for Bitcoin, shares of crypto-related companies showed mixed reactions. Bitcoin proxy MicroStrategy remained stable, while miners Marathon Digital and Riot Platforms experienced negative trends. Coinbase Global faced a 1.65% decline.

The debut of spot Bitcoin ETFs marks a significant shift in the market, signaling increased institutional participation and a potentially transformative perspective on cryptocurrencies as we enter a new year.