Bitcoin Price Jumps After ETF Approval

Bitcoin surpassed $49,000 for the first time in more than two years but quickly retreated to the old price range of $46,000 as the market had mixed reactions.

Bitcoin hit $49,000 a unit late last night for the first time since December 2021 as U.S.-listed Bitcoin exchange-traded funds (ETFs) began trading amid heightened expectations. The largest cryptocurrency by market capitalization rose from below $46,000 early in the day to over $47,000 last night, then jumped to $49,042 a unit around 10 p.m. But the price only held for a few minutes, Bitcoin quickly fell back below $46,000.

Today, this digital currency mainly fluctuates around the $46,000 mark, almost unchanged in price compared to yesterday.

Bitcoin price is hovering around $46,000 per unit, unchanged from yesterday. Photo: CoinMarketCap — Bitcoin price is hovering around $46,000 per unit, unchanged from yesterday. Photo: *CoinMarketCap*

Crypto stocks also fell, erasing yesterday’s gains. Coinbase’s stock fell 5%, while Bitcoin mining companies Marathon Digital and Riot Platforms both fell more than 10%.

The developments are somewhat out of sync with the scenario written by many analysts about a market excitement when the Bitcoin ETF is approved. According to CoinDesk , Bitcoin's price has been dancing and has not really broken out because investors are closely monitoring the capital that the 11 funds will attract on the first day.

Data from the London Stock Exchange Group (LSEG) shows that Bitcoin ETFs recorded $4.6 billion worth of transactions as of yesterday afternoon. Of the 11 funds, products from the two asset management giants BlackRock and Fidelity dominated the trading volume. This level is considered by experts to be relatively strong compared to the practice of a newly launched ETF.

Experts’ opinions on Bitcoin ETFs are also mixed, which has somewhat affected market sentiment. Many agree that the above turning point allows investors to take advantage of the volatile price fluctuations of cryptocurrencies to make profits without the hassle of having to learn dozens of concepts of this market such as self-custody, blockchain, private keys, etc.

Erik Voorhees, one of the first successful entrepreneurs in cryptocurrency, said the most important result of Bitcoin ETFs is to prevent governments from “harshly treating” cryptocurrencies. He said that when tens of millions of seniors can still passively own Bitcoin, the political and economic damage from a ban would be significantly less. “Bitcoin is no longer just an asset for super programmers in the dark,” he added.

However, some parties are still concerned that the emergence of an ETF means that Bitcoin is cooperating with the original "enemy" of cryptocurrency - traditional finance (TradFi), big banks and Wall Street. This risks breaking the "original promise" of Bitcoin of decentralization, empowerment and bringing freedom of money to everyone without having to involve traditional financial institutions.

Nicky Gomez, an expert at cryptocurrency consultancy XReg Consulting, warned that ETFs that siphon capital away from traditional financial institutions will further centralize the Bitcoin market, which is inherently decentralized. This takes the digital asset “away from its true value and potential.” He also warned of creating a greater divide between crypto purists and Bitcoin ETF advocates.

The approval of Bitcoin ETFs is a watershed moment for the cryptocurrency industry, likely to attract interest from large institutions, but its impact on the broader investment market is likely to be limited as cryptocurrencies remain a small asset class, analysts at credit rating agency Moody's said.

“Bitcoin represents a relatively small portion of investors’ portfolios and ETF approval is not necessarily a reason for them to increase their allocation to the asset class,” Cristiano Ventricelli, vice president of digital assets at Moody’s, stressed.

Xiao Gu (according to CoinDesk , Reuters )

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