Bitcoin nears $32,000 – hitting its highest level this year – as confidence grows federal regulators will approve applications from BlackRock and Fidelity to run crypto funds

Bitcoin’s value surpassed $31,700 on Monday, its highest level this year.

The increase came as a federal court ruled verdict Monday afternoon paving the way for a Bitcoin Exchange Traded Fund (ETF).

An ETF is a fund that behaves like a stock and can be bought and sold by investors through an exchange. In the case of a Bitcoin ETF, its value would reflect Bitcoin’s performance.

Major investment firms, including BlackRock and Fidelity, have applied to operate their own Bitcoin ETFs, but the US Securities and Exchange Commission (SEC) has yet to allow them.

It is widely believed that if and when spot Bitcoin ETFs are legitimized by the SEC, Bitcoin will gain mainstream acceptance and be opened up as an asset class to more investors, increasing its demand and therefore its value.

Bitcoin’s price remains well below the 2021 record of almost $69,000, but has reached the $30,000 mark several times this year

Although Bitcoin has reached the $30,000 mark at several points in 2023, it has struggled to maintain these highs for significant periods. The price is still well below the 2021 record of almost $69,000.

Many major financial institutions have been hoping to roll out Bitcoin ETFs for years, but the SEC has rejected their applications, mostly citing the possibility of fraud and market manipulation.

On Monday, a DC Circuit Court of Appeals closed the books on a dispute between the SEC and crypto asset manager Grayscale, ruling that the agency should throw out the rejection of the company’s spot Bitcoin ETF application.

Now the SEC can choose whether to approve Grayscale’s application or reject it on other grounds. The agency is still assessing proposals from various investment companies and is expected to make a decision on this at the latest next year.

“Over the past month, growing investor confidence in the upcoming adoption of BTC spot ETFs has driven significant momentum toward BTC,” Matteo Greco, a research analyst at crypto and fintech-focused investor Fineqia, said in a note .

In late afternoon trading, Bitcoin rose more than 6 percent in 24 hours to its highest price of 2023, just below $32,000.

Bitcoin briefly rose to nearly $30,000 last week after a fake news story about the SEC approving BlackRock’s spot bitcoin ETF circulated on X, formerly known as Twitter.

Bitcoin’s rise on Monday also sent shares of crypto and blockchain companies such as Coinbase Global and Marathon Digital Holdings up 6.5 percent and 11.9 percent, respectively.

On Monday, the 10-year U.S. Treasury yield also surpassed 5 percent for the first time since 2007, roiling markets. The photo shows Fed Chairman Jerome Powell

Bitcoin’s recent rally also comes as fear spreads across financial markets that Israel’s war with Hamas could develop into a broader regional conflict.

“We have seen recent geopolitical tensions drive demand for scarce assets, including both physical gold and Bitcoin, which many investors view as digital gold,” said Zach Pandl, director of research at Grayscale. Reuters.

On Monday, the yield on 10-year U.S. Treasury bonds also surpassed 5 percent for the first time since 2007, roiling markets.

According to rating agency Moody’s, it threatened to “throw US economic expansion off course.”