Bitcoin has pushed past the $45,000 threshold in 2024, marking its highest point in almost two years, amid mounting expectations that the U.S. Securities and Exchange Commission will approve Bitcoin spot exchange-traded funds (ETF) by mid-January. 

The largest cryptocurrency by market capitalization has increased nearly 6% in the first two days of the new year and 170% from a year ago to change hands at $45,014, data from CoinGecko shows at the time of writing.

Spot Bitcoin ETFs are publicly traded investment funds that enable investors to gain exposure to bitcoin (BTC) without actually owning the cryptocurrency. Unlike cryptocurrencies that are traded on crypto exchanges, ETFs are traded on traditional securities exchanges, such as the New York Stock Exchange. 

The potential of introducing crypto to so-called main street investors through ETFs has encouraged some of the biggest names on Wall Street to make the leap. These include BlackRock and Franklin Templeton along with Invesco and Galaxy Digital, who have applied for SEC approval of spot Bitcoin ETFs. All told, the SEC is currently deliberating on 12 different Bitcoin ETF applications, including ones from ARK Investment and 21Shares, Grayscale, Bitwise, Valkyrie Funds and Van Eck.

“The excitement and expectation of multiple ETF approvals continue to propel [BTC] to today’s $45k,” Jim Hwang, chief operating officer at Firinne Capital, wrote in a text message to Unchained.

He also pointed to strengthening economic conditions, which support an increase in the price rise of BTC as well. 

“A secondary factor was the improvement in the macroeconomic conditions with inflation easing and expectations building that the U.S. Fed may actually cut interest rates in 2024,” Hwang said. “Lower rates and easier liquidity are supportive of higher BTC prices.”

The vast majority of BTC’s rise stems from optimism of an ETF approval, Carlos Mercado, a data scientist at blockchain analytics firm Flipside Crypto, said to Unchained over Telegram. “The ETF narrative fits neatly into its argued use case: a hedge against the broader system’s uncertainty: inflation interest rates, currency collapse (Argentina, Turkey, etc).”

The experts see some risk if the SEC delays its decision or fails to approve ETFs altogether. “Expectations have mostly been baked into the BTC price for a set of approvals by mid-Jan.,” Hwang said.

He thinks the downside to any delays, if any, will be temporary, however. “Once approved, eyes will be focused on the ETF money flows as indicators for the pace of adoption. Prices will likely trend up on the excitement and then retrace in search of a support level.”

Investors have also noted the bullish activity of Microstrategy, the publicly-traded software firm and largest corporate holder of BTC, which acquired about 14,620 bitcoins for roughly $615.7 million in the month-long period up to Dec. 26. 

CLARIFICATION Jan. 2, 3:45 pm: Invesco and Galaxy Digital together have applied for approval of a spot Bitcoin ETF. A previous version of this story listed the investment firms having separate applications.