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Bitcoin surges above $37,000, hitting highest mark in 18 months

Bitcoin (BTC-USD) surged above $37,000 Thursday morning to its highest price in 18 months, a rally fueled by more optimism that regulators could soon approve the first spot bitcoin exchange-traded fund.

As of 12 p.m. ET it had slipped below $37,000 but was still up nearly 3% over the last 24 hours.

The world’s largest cryptocurrency has now gained more than 32% over the past month and 120% since the beginning of January.

"There is no question that the very positive action in bitcoin this year continues to be very impressive," Matt Maley, chief market strategist with Miller Tabak + Co., wrote in a Thursday morning note.

It is still far from an all-time high, however. Bitcoin peaked at $68,789 in November 2021 but then crashed in 2022 as the Federal Reserve began raising interest rates and a series of firms imploded, including crypto exchange FTX in November 2022.

A widespread crackdown on the crypto industry followed. Regulators sued a number of big players, including Coinbase and Binance, and last week a jury convicted FTX founder Sam Bankman-Fried of defrauding customers, lenders, and investors.

FILE - FTX founder Sam Bankman-Fried leaves Manhattan federal court, June 15, 2023, in New York. When cryptocurrencies collapsed and companies failed last year, Congress considered multiple approaches for how to regulate cryptocurrencies in the future. However, most of those efforts have gone nowhere, especially in this chaotic year that has been dominated by geopolitical tensions, inflation and the upcoming 2024 election. (AP Photo/Bebeto Matthews, File)
FTX founder Sam Bankman-Fried. (AP Photo/Bebeto Matthews, File) (ASSOCIATED PRESS)

Now investors are newly optimistic that the industry is poised for more mainstream acceptance. They are hoping the Securities and Exchange Commission will soon grant approval for a spot bitcoin ETF, which would allow investors to get exposure to the cryptocurrency without having to own it.

BlackRock (BLK) is among the big-name money managers that have recently applied to launch such a product.

Photo by: STRF/STAR MAX/IPx 2022 5/16/22 An Blackrock sign is seen in New York City.
BlackRock is the world's largest money manager. (STRF/STAR MAX/IPx) (STRF/STAR MAX/IPx)

Grayscale Investments wants the SEC to sign off on the conversion of its bitcoin trust into a spot bitcoin exchange-traded fund following an August decision in its favor from a three-judge panel of the District of Columbia Court of Appeals.

The panel concluded the SEC had been "arbitrary and capricious" when it denied Grayscale's conversion application in 2022.

Grayscale has since picked up discussions with the SEC’s divisions of markets and trading and division of corporate finance, according to a person familiar with the matter.

The next official milestone where the SEC must accept or reject approval for a spot bitcoin ETF is Jan. 10. But the SEC could approve applications sooner.

“Any timing is absolutely speculative,” this person added.

Bitcoin’s surge on Thursday also pushed the stocks of digital asset companies higher. Coinbase (COIN), the largest US crypto exchange, rose 8% while MicroStrategy (MSTR) was up 7%. Meanwhile, Marathon Digital (MARA) surged 11%.

Crypto stocks had given back some of their gains by midday.

Bitcoin appears to be getting “very overbought,” Maley said, suggesting it may soon see a pullback. However, its mid-week surge hasn’t seen the momentum loss of previous rallies this year, he added.

“This is the kind of breakout move that frequently leads to an even bigger advance before long,” Maley said.

To be sure, bitcoin and the crypto markets are heavily driven by derivatives trading and that can exaggerate market activity in either direction.

Over the past 24 hours, crypto trading volume has doubled to $87 billion as of noon New York time. For the same period, $132 million in trader positions shorting bitcoin have been liquidated, according to crypto derivatives source Coinglass.

The size of total short liquidations is far smaller than past so-called short squeeze fueled rallies that bitcoin has experienced this year, suggesting that more investors are directly buying the underlying/spot asset.

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto and other areas in finance.

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