Cryptocurrency prices experienced a significant surge on Tuesday as bitcoin continued to rally, fueling hopes of an imminent launch of a spot bitcoin exchange-traded fund (ETF). Bitcoin’s price skyrocketed above $35,000 intraday on Tuesday, reaching its highest level since May 2022.

The recent surge in bitcoin can be attributed to its leading role in driving up cryptocurrency prices over the past two weeks. This surge followed a court loss against Grayscale Investments (GBTC) and the subsequent decision by the U.S. Securities and Exchange Commission (SEC) not to challenge it. The court loss pertained to Grayscale’s effort to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF, which gained further momentum on October 13.

Investors and market participants have been eagerly anticipating the launch of a spot bitcoin ETF, as it would provide a regulated and accessible means for institutional investors to gain exposure to bitcoin. The recent court ruling and the subsequent SEC review of Grayscale’s ETF application have added to the optimism surrounding this development.

Growing optimism for the approval of a spot bitcoin ETF among institutional investors

Institutional demand for a spot bitcoin ETF has reached unprecedented levels, according to Diogo Monica, co-founder and president of Anchorage Digital. Monica emphasized that for many institutions, it’s not a question of “if” but “when” the SEC will approve a spot bitcoin ETF. He believes that such an ETF would provide a regulated and accessible means for institutions to gain exposure to bitcoin, thereby bolstering institutional confidence in the broader cryptocurrency ecosystem. Approval from the SEC would also likely lead to increased demand for crypto infrastructure from registered investment advisors (RIAs) and large asset managers.

Industry leaders express confidence in the imminent launch of a spot bitcoin ETF

Prominent industry figures share this optimistic outlook. Paul Grewal, Coinbase’s Chief Legal Officer, expressed his hope for the approval of these ETF applications during a recent CNBC interview. Likewise, Cathie Wood, CEO of ARK Invest, anticipates that the approval for a spot bitcoin ETF will occur either this year or in early 2024, as revealed in an October 12 podcast interview.

Wood’s ARK Invest has been actively positioning itself in the market. Taking advantage of the bitcoin rally, ARK Invest sold a total of 42,613 shares of Coinbase stock on Monday, valued at $3.29 million based on the closing price of $77.21. Additionally, they sold 100,739 shares of Grayscale’s Bitcoin Investment Trust from their ARK Next Generation Internet ETF (ARKW), totaling $2.48 million based on the closing price of $24.70.

Positive momentum extends to other cryptocurrencies and related stocks

The surge in bitcoin’s price had a positive spillover effect on other cryptocurrencies. Ethereum, the second-largest cryptocurrency, traded around $1,780 on Tuesday afternoon, after reaching a high of $1,853 earlier in the day.

Notably, the market action extended to related stocks as well. Grayscale’s GBTC stock surged by 6.2% on Tuesday, while Coinbase’s stock witnessed an impressive increase of 6.3%. Bitcoin mining companies also experienced substantial gains, with Marathon Digital surging 11.5% and Riot Platforms jumping 10.3% on Tuesday.

MicroStrategy’s stock continues to climb as the company holds significant bitcoin holdings

MicroStrategy, a computer software company renowned for its significant bitcoin holdings, registered another 12.5% increase on Tuesday, following an 8.5% climb on Monday. CoinDesk reported that MicroStrategy currently holds 158,245 bitcoins, acquired at an average purchase price of $29,582 as of September 24.

The company’s CEO, Michael Saylor, has been a vocal proponent of bitcoin as a long-term store of value. MicroStrategy’s continued investment in bitcoin has not only led to substantial gains in its stock price but has also attracted attention from other corporate entities considering diversifying their balance sheets with bitcoin.