Bitcoin ETF expectations, coupled with increasing crypto bets, lead to rally
Data from CryptoCompare shows that the price of Bitcoin started last week above $56,000 and moved sharply upward to surpass $62,000 – less than $2,000 away from its all-time high seen earlier this year.
Ethereum’s Ether – the second-largest cryptocurrency by market capitalisation – moved from around $3,500 to a $3,900 high. The cryptocurrency failed to breach the $4,000 mark and is currently trading at $3,780.
Headlines in the cryptocurrency space this week were heavily influenced by the prospect of a Bitcoin futures exchange-traded fund (ETF) being listed in the United States. While the US Securities and Exchange Commission (SEC) hasn’t approved any of the applicants, sources cited by Bloomberg have said the regulator will allow Bitcoin futures ETFs to start trading.
Unlike other Bitcoin ETF applications, proposals by ProShares and Invesco are based on futures contracts and were filed under mutual fund rules that SEC Chairman Gary Gensler has said provide “significant investor protections”.
A Bitcoin ETF approval in the US would be the culmination of a near decade-long campaign to list such a product. Crypto advocates have been looking to list it ever since Cameron and Tyler Winklevoss, founders of the Gemini exchange, filed the first Bitcoin ETF application in 2013.
Investors have been eyeing Bitcoin over the last few months as the cryptocurrency has been providing confidence with its inflationary hedge characteristics, bolstered by its limited supply. CryptoCompare data shows BTC outperformed major commodities so far this year. Gold, which has been a historical hedge against inflation, dropped 5.6 per cent so far this year while BTC rallied 96 per cent.
Bitcoin ETF applicants have, so far, been barred by the SEC, which was concerned about potential price manipulation in the cryptocurrency market and a lack of liquidity. Notably, this week Nasdaq-listed exchange Coinbase said in a new policy proposal that the US should create a new regulator to oversee digital asset markets, warning that the failure to properly regulate the space could leave the country even further behind others.
Over the week the US government also revealed it may expand its efforts to study and regulate the cryptocurrency sector as the Biden administration is considering an executive order for federal agencies, which would require them to study the crypto industry and provide recommendations for its oversight.
The order would include the Treasury Department, Commerce Department, National Science Foundation and National Security Agencies. It would also clarify the responsibilities that each agency has around cryptocurrency and blockchain technology.
Cryptocurrency investments rise
A new report has revealed cryptocurrency companies raised a record $6.5 billion between July and September of this year in a total of 339 funding rounds. The figure marks the third consecutive record this year, after firms raised $3.83 billion in the first quarter and $5.1 billion in the second.
The figure almost doubles the amount that VC funds invested in the space last year of $3.8 billion. The cryptocurrency venture capital firm led by Coinbase co-founder Fred Ehrsam, Paradigm, is reportedly looking to raise $1.5 billion for startup investments.
Paradigm’s war chest could place it near the top of the pack amid growing interest in the cryptocurrency space. Leading cryptocurrency exchange Binance has also announced the launch of a $1 billion growth fund to support the Binance Smart Chain network.
Roughly half of the funds will be directed toward investments in areas such as gaming, financial services, and virtual reality, with $300 million of the remainder going to a builder program and $100 million moving toward liquidity incentives and talent development.
US fintech giant Stripe is also looking to hire a new blockchain team to enable cryptocurrency payments for its users, years after it dropped support for Bitcoin payments over the network’s transaction times and fees.
MVIS Index Solutions, in partnership with CryptoCompare, launched this week eight new digital asset indices covering decentralized finance (DeFi), infrastructure application, media and entertainment, and smart contracts.
NFT marketplace competition heats up
Popular cryptocurrency exchange FTX.US this week launched a non-fungible token (NFT) marketplace that will support trading for a range of Solana-based NFTs. It wasn’t alone, however, as Coinbase shortly after announced plans for its own NFT marketplace.
NFT sales have boomed this year, to the point their market topped $10 billion in transaction volume in the third quarter of this year. Some NFTs sold for exorbitant sums, with a digital collage from Mike Winkelmann, the artist known as Beeple, selling for nearly $70 million.
Auction house Sotheby’s is also diving into the world of digital collectibles with the launch of Sotheby’s Metaverse marketplace. The auction house’s move comes months after it first started auctioning NFTs.
Featured image via Unsplash.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.