Bitcoin rebounds on spot ETF hopes after court victory

Bitcoin rebounded sharply on Tuesday afternoon thanks to revived optimism over its future prospects following a landmark US court ruling that brings exchange-traded funds a step closer.

The cryptocurrency jumped over 8% to $28,178, recovering from a dismal August. The gains came after a federal court said the Securities and Exchange Commission was wrong to reject a spot bitcoin ETF proposal from Grayscale Investments.

The decision was a major victory for crypto asset managers who have argued such regulated retail investment products would let mainstream investors access bitcoin more easily. This could unlock a wave of fresh capital.

Several major financial firms including BlackRock have spot bitcoin ETF applications pending with the SEC. The ruling is likely to factor into the regulator’s thinking, boosting the odds of approval.

“This is a significant sign that a bitcoin spot ETF is not far off,” said economist Noelle Acheson who has researched crypto trends. The market has awaited such a catalyst after a tough summer, she added.

Bitcoin had been headed for its worst monthly loss since November prior to the court boost. Concerns over Federal Reserve policy tightening and low summer trading volumes put pressure on the cryptocurrency.

But the Grayscale decision offered new momentum after months of rangebound price action. Some analysts say it could revive institutional interest in cryptocurrencies as an asset class if spot ETFs materialise.

However, others argue crypto will still take cues from wider financial markets in current uncertain conditions rather than trade on its own fundamentals for now.

“Crypto remains a risk-on growth and speculative asset, so a muddy macro picture will remain a headwind despite improving structural factors,” said AKJ Crypto founder Anders Kvamme Jensen.

Nonetheless, bets are rising that the Grayscale ruling could prove a key inflexion point if the SEC greenlights spot bitcoin funds. Greater accessibility for retail investors could be transformative.