Fresh optimism around a spot Bitcoin ETF approval likely pushed the price of Bitcoin higher on Monday, with the digital asset surging to an 18-month high.
On Oct. 23, Bitcoin jumped 13% over a 24-hour period to a high of $35,150 before losing ground. The largest cryptocurrency by market capitalization was trading at $34,429 at the time of writing.
According to Bloomberg ETF analyst Eric Balchunas, recent amendments to BlackRock’s ETF application indicate that the asset manager intends to seed the ETF in October.
BlackRock stating in their recent spot Bitcoin ETF amendment that they are seeding the ETF in October. Don’t want to read that much into it but it is new info not in original filing so noteworthy (esp bc they BlackRock). Great catch by Scott. https://t.co/CGBmuTJ7W0
— Eric Balchunas (@EricBalchunas) October 23, 2023
“Seeding an ETF is when initial funding is provided (typically) by a bank or broker dealer used to purchase a few creation units (in this case bitcoin) in exchange for ETF shares which can be traded in open market on Day One,” he explained.
Balchunas noted that he wouldn’t necessarily interpret the amendment as BlackRock “buying a ton of Bitcoin,” but said that the disclosure points to another step in the process of its launch.
Elsewhere, the U.S. Court of Appeals issued a mandate that the U.S. Securities and Exchange Commission (SEC) must review Grayscale’s application for a spot Bitcoin ETF application. “After many years of applications being rejected by the SEC, the court ruling in favor of Grayscale has us more confident that an ETF will exist in the near future,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, wrote to Unchained. “This will provide an easy onramp for fiat into crypto, and is predicted by many investors to lead to increased demand for Bitcoin.”
Indeed, the ETF-related optimism was reflected in all parts of the market, including weekly institutional inflows into crypto investment products. CoinShares found that 84% of the $66 million inflows went to Bitcoin-linked funds, while short sellers increasingly dropped off from their positions.
🟢 Week 43 inflows: US$66m
— CoinShares (@CoinSharesCo) October 23, 2023
EY’s Paul Brody told CNBC earlier in the day that approval of a spot Bitcoin ETF could trigger massive demand from institutional investors.
In a note to Unchained, Mark Connors, head of research for Canadian digital asset manager 3iQ, noted that “well over half of global inflows to crypto exchange traded products occurred in October, “with the bulk of those in the most recent week, all pointing to increasing momentum for BTC and digital assets as a whole.”