In a Manhattan courtroom this month, the cryptocurrency industry faced a reckoning as its onetime star, Sam Bankman-Fried, was convicted of fraud in a trial that put the industry’s excesses on vivid display. But the ever-volatile crypto markets were already moving on. Shortly before Mr. Bankman-Fried’s verdict landed on Nov. 2, the price of Bitcoin surpassed $35,000, its highest level since an industry meltdown in 2022. Last week, Ether, the second-most popular digital currency, surged 10 percent to around $2,100, its best performance in months. Some investors rushed to declare the end of the so-called crypto winter of falling prices and financial scandals that have plagued the industry for the last 18 months. Driving the renewed euphoria? A potential new fund. Crypto investors are growing optimistic that the Securities and Exchange Commission will approve an exchange traded fund, or E.T.F., that tracks the price of Bitcoin, analysts said. The fund would trade on traditional stock exchanges and offer an easy way for people to invest in cryptocurrencies, potentially bringing a wave of money into the industry. Some proponents have hailed the possibility of this new investment vehicle, known as a spot Bitcoin E.T.F., as crypto’s “salvation.” In August, Grayscale Investments, a crypto asset manager, scored a legal victory over the S.E.C. that seemed to pave the way for it to offer the Bitcoin product. And last week, BlackRock, a giant money manager, field paperwork to establish a similar E.T.F. to track the price of Ether. These new funds “could represent a watershed,” said Michael Sonnenshein, Grayscale’s chief executive. “We’re already starting to see quite a few signs of the crypto winter melting.” The industry kept battling. In 2021, the S.E.C. approved E.T.F.s that bet on the future prices of Bitcoin without holding the currency itself. But the agency rejected an effort by Grayscale to introduce the first E.T.F. linked directly to Bitcoin, arguing that the crypto markets were subject to manipulation and other consumer risks. An official approval could arrive as early as January, analysts at Bloomberg have predicted. Mr. Sonnenshein of Grayscale said he had observed a high “level of understanding and engagement” from the S.E.C. “For us, it really continues to be a matter of when, not a matter of if,” he said. skeptics abound. J.P. Morgan analysts published a report last week that called crypto’s recent surge “overdone” and argued that an E.T.F. approval would simply redistribute the capital that traders have already put into the industry, rather than attracting new investment. Crypto E.T.F.s that trade in Canada and Europe “have gained little interest from investors since their inception,” the report said. On Monday, the crypto news website The Block reported that BlackRock had applied to introduce an E.T.F. tracking the price of XRP, a digital currency that has been the subject of years of litigation between its issuer, Ripple, and the S.E.C. XRP’s priced jumped by more than 10 percent. Crypto fans celebrated on X, the website formerly known as Twitter. But the news wasn’t true: An unknown trickster had filed false paperwork that listed the name of one of BlackRock’s executives.
