Bitcoin bulls have brushed off a sweeping legal crackdown against some of the biggest players in the cryptocurrency industry, high interest rates and global recession concerns to push the digital currency’s value close to a 20-month high this week.
The digital coin traded at around $41,700 on Tuesday morning, after pushing past $42,000 the day before. It has gained roughly 150 percent this year, far outperforming the Nasdaq composite index, as investors bet that regulators will soon approve the first spot exchange-traded fund that is designed to track the price of Bitcoin.
Investment management specialists are swarming. Thirteen firms, including BlackRock, Fidelity and the Swiss-based Pando Asset, have filed paperwork with the Securities and Exchange Commission to create such an E.T.F.
An E.T.F. is essentially a bundle of assets split up into shares that investors can buy and sell on stock exchanges. Unlike existing Bitcoin E.T.F.s, which are linked to futures contracts, a so-called spot fund would let investors own the token itself, without the hassle of requirements like a crypto wallet. Regulatory approval for such a product would usher in the industry’s long-held dream of a mainstream investment product.
The S.E.C. has stayed quiet about when such approval might come, despite the flurry of fund filings. Still, investors have been increasing their bets on Bitcoin in recent weeks, amid speculation that the agency will make its decision by January.
It’s worth remembering that trading in crypto is exceptionally volatile, given the relatively small market for digital currencies. The breathless anticipation for a spot E.T.F. has created conditions for a rally based on FOMO — that is, fear of missing out — according to the crypto investment services firm Matrixport.