The Bitcoin price in US trading had surged by over 10% as signs of the imminent approval of the first Bitcoin ETF became more apparent on late Monday. In Asian trading, the momentum continued as the $35,000 mark was breached, with increasing volume in spot trading. This rally was further fueled as it led to a short squeeze for speculators.

The current market dynamics are indicating a transition into a new bull market, and it seems unlikely to be just a flash in the pan. For one, there are strong indications that central banks will soon complete their tightening cycles, which would mean that the worst is over for risk assets like tech stocks and cryptocurrencies. Although this is a gradual process, when optimism spreads in the crypto market, prices can surge rapidly.

Furthermore, it seems that the approval of spot Bitcoin ETFs is now inevitable. SEC Chairman Gary Gensler has suffered so many legal defeats in his efforts to block them that the agency is now showing a more conciliatory approach between the lines, preparing for approvals en masse. The recent decision to convert the Grayscale Bitcoin vehicle into a spot ETF was the final blow. Gensler has failed with his regulatory approach and should consider resignation before being ousted from office by the senators.

The first approved Bitcoin ETF is likely to be Blackrock's fund. In the fine print of the 'iShares Bitcoin Trust,' a ticker symbol ($IBTC) is now included, but it is only available if registered with the Depository Trust & Clearing Corporation (DTCC). Twelve more spot vehicles are in the queue from providers such as Fidelity and Wisdom Tree. If the approvals come – which the SEC could take until January 11, 2024, to decide – it would represent increased legitimacy for Bitcoin. Through so-called "Surveillance Agreements," companies like Coinbase and Blackrock aim to ensure that there are no price manipulations in the reference price of spot trading.

Such a scenario of mainstream acceptance could then serve as the basis for inflows of capital, as industry data already suggest. More liquidity is desperately needed, as trading in cryptocurrencies has significantly thinned out. If the signs are accurate, then the time of darkness from the crypto winter is over.