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Bitcoin price broke through $34,000, reaching its highest level since May last year, supported by positive sentiment towards a Bitcoin exchange-traded fund.

The world’s largest cryptocurrency traded 4.97% higher at $34,596.40 on Tuesday, according to data from Coin Metrics.

Ether, the second largest digital coin, has risen to its highest level since August, according to data from Coin Metrics.

“The real catalyst that created the ‘God Candle’ today and pushed Bitcoin above $34,000 was the $167 million in short liquidations, mostly on offshore exchanges,” said Ryan Rasmussen, analyst at Bitwise Asset Management.

“I don’t think anyone expected the magnitude of the price action we’re seeing, and those investors who have been shorting Bitcoin in the $33,000-plus range are certainly feeling the sting of that surprise today,” Rasmussen said.

Anticipation for a Bitcoin ETF grew after the court ruled in favor of cryptocurrency asset manager Grayscale over the US Securities and Exchange Commission, which wanted to convert its giant Bitcoin fund Grayscale Bitcoin Trust (GBTC) into an ETF.

Last week, the SEC declined to appeal the ruling within a key deadline, raising hopes that a Bitcoin-related ETF could be approved in the next few months.

A Bitcoin ETF would offer investors the opportunity to participate in Bitcoin’s price movements without directly owning the cryptocurrency.

Bitcoin is considered an extremely volatile asset and its price fluctuations are unpredictable.

Major financial institutions such as BlackRock, Invesco, Fidelity and Grayscale are pushing for Bitcoin ETFs and have filed applications to sell such assets, portraying them as safer investment options compared to direct crypto investments, which are known for their speculative nature and price volatility.

Coinbase told CNBC it is confident a U.S. Bitcoin exchange-traded fund will be approved by the U.S. Securities and Exchange Commission (SEC).

Investors are watching closely

The crypto industry is closely monitoring such developments that could indicate a comeback.

Over the past year, the sector has been embroiled in scandals and major dramas, such as the bankruptcy of FTX and the indictment of Terraform and its CEO Do Kwon in February for defrauding investors.

Bitcoin price reached an all-time high in November 2021 with values ​​of over $65,000. However, a year later, the value plummeted to around $16,000 in November last year. At that time, Sam Bankman-Fried’s crypto exchange FTX collapsed and filed for bankruptcy.

The SEC is cracking down on crypto firms, with companies like Coinbase and Ripple embroiled in lawsuits with the SEC accusing them of violating securities laws.

Both Coinbase and Ripple, as well as other crypto firms, have criticized the US for a lack of clarity on crypto regulations and threatened to leave the country in response to the SEC’s actions.

– CNBC’s Tanaya Macheel and Ryan Browne contributed to this story.

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