Bitcoin nears $60,000 as investors eye first US ETFs

Bitcoin hit a six-month high on Friday, approaching the record hit in April, as traders became increasingly confident that US regulators would approve the launch of an exchange-traded fund based on its futures contracts.

The world's biggest cryptocurrency rose nearly 4 per cent to as high as $59,664, its highest since mid-April. It has doubled in value this year and is near April's record high of $64,895. The US Securities and Exchange Commission (SEC) is poised to allow the first US bitcoin futures Exchange Traded Funds (ETFs) to begin trading next week, Bloomberg News reported on Thursday, citing people familiar with the matter.

Ben Caselin, head of research and strategy at Asia-based cryptocurrency exchange AAX, said bitcoin's spike above $59,000 wasn't arbitrary and long-term investors had been accumulating it for a while. "It is widely expected that Q4 will see significant progress around a bitcoin ETF in the US," he said. Friday's moves were also spurred by a tweet from the SEC's investor education office, he said.

"Before investing in a fund that holds Bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits," the SEC tweet stated.

Cryptocurrency investors have been waiting for news of the approval of the country's first bitcoin ETF, and some of bitcoin's rally in recent months has been in anticipation of that move and how it could speed up its mainstream adoption and trading.

Several fund managers, including the VanEck Bitcoin Trust, ProShares, Invesco, Valkyrie and Galaxy Digital Funds have applied to launch bitcoin ETFs in the United States. Cryptocurrency ETFs have been launched this year in Canada and Europe.

SEC Chair Gary Gensler has previously said the crypto market involves many tokens which may be unregistered securities and leaves prices open to manipulation and millions of investors vulnerable to risks. The Bloomberg report said that the proposals by ProShares and Invesco are based on futures contracts and were filed under mutual fund rules that Gensler has said provide "significant investor protections". The SEC did not immediately respond to a request for comment on the report.

Meanwhile, The FTSE 100 (FTSE) opened at a 20-month high on Friday, after posting its best daily close since August the session before, shrugging off fears that the global energy crunch will slow recovery.

London's benchmark index climbed 0.2% higher after the bell to its highest level since the end of February 2020, while the CAC (^FCHI) shot up 0.6% in Paris and the DAX 0.2% higher in Frankfurt. Oil stocks are the drivers of the rally, as crude prices continue to be driven up in the energy crunch. Banks, airlines, and hospitality companies are also among the risers. "After a choppy start to the week, equity markets appear to be leaning towards a narrative that companies can continue to grow profits, despite the combined pressures of higher energy prices, and supply chain disruptions," Michael Hewson of CMC Markets said.

Meanwhile there was news that new car sales in Europe slumped to their lowest level since September 1995 thanks to a global shortage of semiconductors. New car registrations slipped 23.1% to 718,598 last month compared to a year ago, the European Automobile Manufacturers' Association (ACEA) said.

Across the pond, S&P 500 futures (ES=F) were up 0.3% after the index managed to post its best one-day gain since March, Dow futures (YM=F) rose 0.4%, and Nasdaq futures (NQ=F) were 0.2% higher as trade began in Europe.

The gains on Wall Street were driven by a string of steady earnings announcements from US companies, which fuelled a wave of optimism despite the effects of rising energy prices, and supply chain bottlenecks. US jobless claims fell below 300,000 last week to a fresh pandemic low. There were just 293,000 initial claims, a fall of 36,000 compared with the previous week. This was the lowest level for initial claims since 14 March this year.

Asian shares advanced on Friday, taking their cue from Wall Street which also supported risk-friendly currencies and hurt the safe-haven yen. However, concerns about the Chinese economy did cap gains. In Japan, the Nikkei (^N225) rose 1.8% while Hang Seng (^HSI) jumped 1.3% after a one-day break, and the Shanghai Composite (000001.SS) was 0.4% higher.