Bitcoin extended gains to hit its highest level since May last year, with gains fueled by expectations of new demand for exchange-traded funds (ETFs). Bitcoin once rose 11.5%, exceeding US$35,000. As of press time, it was trading at US$34,437.50. The rebound so far this year has reached more than 100% compared with last year when digital assets plummeted.
The possible approval of the first U.S. spot Bitcoin ETF in the coming weeks is fueling speculative demand for Bitcoin. Asset managers BlackRock and Fidelity Investments are also racing to launch such products.
The SEC has so far opposed ETFs that would allow direct investment in Bitcoin, citing risks such as fraud and manipulation in the underlying market. The investment giant's application sparked speculation that the agency would relent.
Ethereum jumped above $1,800 on Tuesday, but the performance of other cryptocurrencies was mixed. For example, Solana and Dogecoin gave back most of their initial gains.
Bitcoin remains well below its pandemic-era record high of nearly $69,000 hit in 2021 as rising interest rates hit demand for risky assets. Bitcoin's correlation with assets such as stocks, bonds and gold has weakened recently, raising questions about whether mainstream investors have exited.
“Liquidity is a little better than before,” said Justind’ Anethan, head of business development for Asia Pacific at crypto market maker Keyrock. "Prices have now recovered and with that comes a certain amount of liquidity - but still nothing compared to the frenzy of 2020-2021."