A bitcoin rally fuelled by optimism about fresh demand from exchange-traded funds may have further to run if history is any guide.

The largest digital asset posted a 9.8% jump in the seven days to Sunday — the biggest weekly advance since June — as traders bet on the possible approval in coming weeks of the first US ETFs investing directly in the token.

In the past five years, weekly gains of at least that magnitude presaged a 10% average bitcoin climb over the subsequent month. The token rose 3.2% to trade at US$30 818 as of 7.21am SAST on Monday. Smaller coins also rallied, including a 3.3% increase in ether to $1 695.

Asset managers BlackRock and Fidelity Investments are among the fund firms in the race to offer a spot bitcoin ETF in the US. Some argue these funds will bring new inflows into the highest-profile cryptocurrency.

“The drums seem to be beating louder that a bitcoin ETF will be approved by year-end, which would be supportive for the token in the medium term as it will likely bring more institutional players into the space,” said Tony Sycamore, a market analyst at IG Australia.

Bitcoin is also “finding support from the shift in tone by Federal Reserve speakers”, Sycamore said, citing Fed comments hinting at reduced need for another interest rate hike following a tightening in financial conditions.

The US Securities and Exchange Commission has so far resisted spot bitcoin ETFs on risks such as fraud and manipulation in the underlying market. The applications from investment titans stoked speculation that the US agency will relent.

Bitcoin Trust

The regulator also recently indicated it won’t appeal a court ruling that may pave the way for the $18.4-billion Grayscale Bitcoin Trust to convert to an ETF.

Bloomberg Intelligence analysts Elliott Stein and James Seyffart have said “approval of a spot bitcoin ETF looks inevitable” and that a batch of funds is likely to be given the green light, though the exact timing remains uncertain.

The SEC has already allowed ETFs that hold bitcoin and ether futures. The agency overall has cracked down on crypto following last year’s market rout and blow-ups like the bankruptcy of the FTX exchange amid fraud allegations.

Read: Bitcoin jump hints at trader ‘playbook’ for ETF launches

Bitcoin has rebounded 87% this year, outstripping the 44% gain in a gauge of the 100 largest tokens. It now accounts for almost 50% of the $1.2-trillion digital-asset market, a type of dominance it last had in 2021, CoinGecko figures show. The digital asset remains well below its 2021 record of nearly $69 000.