The prices of several major cryptocurrencies jumped on Tuesday amid news of an enormous increase in cryptocurrency trading volumes and the latest signs of the impending first approvals of spot Bitcoin (BTC 0.98%) exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).
As of 5:42 PM Tuesday, Bitcoin was up 4.8%, exceeding the $44,000 price for the first time since April 2022. Dogecoin (DOGE 2.90%) was also up 4.6%, and Shiba Inu (SHIB 1.77%) had gained 4%.
Is crypto trading reaching a fever pitch?
In the latest sign of renewed investor interest in cryptocurrencies, an SEC filing late yesterday by brokerage firm Robinhood (NASDAQ: HOOD) revealed November notional trading volumes for cryptocurrencies had surged by 75% sequentially from October 2023 levels. What's more, Robinhood said that the jump in crypto trading came even as November notional trading volumes for equities (stocks) and options contracts remained roughly flat from October levels. It's also a massive positive reversal for Robinhood, considering the firm revealed a 55% year-over-year drop in crypto trading volumes in its third-quarter 2023 report.
Higher trading volumes don't necessarily equate to higher prices for any given asset. But it seems many investors have piled into crypto in recent weeks for fear of missing out on an extended rally in cryptocurrencies that kicked off in mid-October. That's when the SEC declined to appeal a federal court's August reversal of an order preventing crypto-asset manager Grayscale Investments from converting its popular Grayscale Bitcoin Trust (OTC: GBTC) into an exchange-traded fund. The move then spurred several hopeful spot bitcoin ETF providers at the time -- including Grayscale, Blackrock, and Fidelity -- to file amended registration statements in anticipation of the SEC's approval.
Cryptocurrencies then continued to rise earlier this month as the SEC entered into its first potential approval period for those pending applications. The SEC also reportedly entered into talks with Grayscale at the time regarding the details of its spot bitcoin ETF conversion application.
On that note, this week has already seen multiple additional amended S-1 filings with the SEC for proposed spot bitcoin ETFs, including revisions from BlackRock and crypto index fund provider Bitwise Asset Management. To many crypto industry watchers, these filings are only the latest signs that the SEC is simultaneously giving similar instructions to multiple potential spot bitcoin ETF providers as it works to iron out the details of their respective applications.
The crypto ETF deadline to watch
As I suggested last month, however, investors still shouldn't hold their breath for the first Bitcoin ETF approvals to arrive just yet; note that the first relevant deadline to which the SEC is technically required to respond is Jan. 10, 2024, specifically the date by which it must approve or deny Ark Invest's "21Shares" bitcoin ETF application. But rather than approving only Ark's application in isolation at that time, the SEC will almost certainly approve multiple applications at once to avoid giving a so-called first-mover advantage to any single provider.
With that key Jan. 10, 2024 deadline looming, traders are increasingly excited about the prospect of several new spot bitcoin ETFs providing investors with an easy avenue to diversify into cryptocurrencies. According to data analytics firm CryptoQuant, the resulting capital influx could potentially increase the value of the overall cryptocurrency market by more than $1 trillion over the long term. Given the limited supply of the most popular cryptocurrency tokens, it's easy to see why crypto investors are flocking to put their money back to work before then.
