Blackrock iShares Bitcoin Trust ETF (IBIT) signage at the Nasdaq MarketSite in New York, US, on Thursday, Jan. 11, 2024. Image Credit: Bloomberg

Bitcoin surged past $49,000 for the first time since December 2021 with trading commencing on the first US exchange-traded funds that invest directly in the biggest cryptocurrency.

Before paring the gains, the token advanced as much as 6.7% to $49,021, the highest since December 2021, buoyed by the approval of spot Bitcoin ETFs by the US Securities and Exchange Commission after markets closed on Wednesday.

All of the 11 ETFs have begun trading, and already over $1.4 billion has changed hands in just the first 45 minutes of trading. The Grayscale Bitcoin Trust has seen $634 million change hands, according to data compiled by Bloomberg. When the first Bitcoin futures fund began trading, it saw turnover of almost $1 billion during the entire day. At the time, the futures fund debut was the second-most heavily traded fund on record.

"This is a monumental moment," said Chris Newhouse, a DeFi analyst at Cumberland Labs. "It signals an institutional wave of capital and support flowing into the market, and a new outlook on the markets heading into the new year."

Shares of so-called crypto companies were mostly lower. Bitcoin proxy MicroStrategy was little changed, while miners Marathon Digital and Riot Platforms were both negative. Coinbase Global fell 1.65%.

The SEC had opposed spot Bitcoin ETFs for more than a decade, while the crypto sector as a whole has faced withering criticism from the agency's Chair Gary Gensler. He has repeatedly argued that the industry is rife with fraud and misconduct. The SEC cracked down on digital assets following a 2022 rout and collapses such as the bankruptcy of Sam Bankman-Fried's FTX exchange.

But the SEC last year lost a key legal fight against asset manager Grayscale Investments, spurring speculation that the regulator would acquiesce to the spot ETFs. The digital-asset investment house has now converted the roughly $29 billion Grayscale Bitcoin Trust, the largest fund investing in the token, into an ETF.

"The ETF is effectively a watershed moment for financial advisers who now must have an opinion on this asset-class," said Sui Chung, chief executive of data provider CF Benchmarks, which supplies indexes for several of the approved ETFs. "They might still not recommend it to their clients, but the fact it's now available through a regulated product means they must at least have a viewpoint. This could open the door to a much more steady flow of interest and flows into the asset-class."