Bitcoin, the leading cryptocurrency by market capitalization, has surged above $28,000 for the first time since early May, as signs of institutional crypto adoption bolstered investor sentiment.
According to data from CoinMarketCap, Bitcoin was trading at $28,270 as of 8:00 a.m. ET on Wednesday, up 11% in the past seven days and 4% in the past 24 hours.
One of the catalysts for the rally was the launch of a new crypto exchange backed by Wall Street firms, including Fidelity Investments, Bank of New York Mellon Corp., State Street Corp. and Morgan Stanley.
The exchange, called Pure Digital, aims to offer institutional-grade trading infrastructure and liquidity for digital assets, as well as over-the-counter (OTC) services and smart order routing.
Pure Digital said it executed its first bitcoin trade on Tuesday, using State Street’s trading technology. The exchange plans to add more cryptocurrencies and trading products in the future.
Another factor that boosted Bitcoin was the filing of a spot bitcoin exchange-traded fund (ETF) by BlackRock, the world’s largest asset manager with $9.5 trillion under management.
BlackRock submitted its application to the U.S. Securities and Exchange Commission (SEC) on Monday, joining other investment firms such as WisdomTree Investments and Invesco that have also filed for spot bitcoin ETFs recently.
A spot bitcoin ETF would allow investors to directly own bitcoin through a regulated vehicle, unlike existing products that track bitcoin futures or other derivatives. However, the SEC has so far rejected or delayed all applications for bitcoin ETFs, citing concerns over market manipulation, custody and investor protection.
Still, some analysts believe that the SEC may eventually approve a bitcoin ETF under its new chairman Gary Gensler, who has expressed some openness to crypto innovation.
“We think there is a high probability that we will have a bitcoin ETF by early next year,” said James Butterfill, investment strategist at CoinShares, a digital asset manager. “We think Gensler understands the space well and is more likely to be lenient than previous chairs.”
Butterfill added that a bitcoin ETF would be a “game-changer” for the crypto market, as it would attract more institutional and retail investors, as well as reduce the premium that some existing products charge over the spot price.
Other cryptocurrencies also rose on Wednesday, following Bitcoin’s lead. Ether, the second-largest crypto by market cap, was up 7% to $1,830, while Cardano, the third-largest, was up 12% to $1.18. Solana, Polkadot and Avalanche were among the top performers in the top 20 coins by market cap, gaining more than 15% each.
