Bitcoin surged upwards overnight after it took a dive at the end of last week when the US Securities and Exchange Commission (SEC) denied approval for Tyler and Cameron Winklevoss to list a bitcoin only exchange-traded fund (ETF).
The twins' hopes were dashed on Friday after the US regulator said it wasn't happy with the fact the ETF focussed on a mainly unregulated asset, which would make enforcement and surveillance too difficult to implement.
Last week, the cryptocurrency rose as high as $1,300, hitting a new record of $1,365 before falling back down to below $1,100, according to one index.
However, speculation a bitcoin ETF could be listed in Europe using an Undertaking in Collective Investments in Transferable Securities (UCITS) structure may explain why bitcoin has rapidly bounced back.
According to Bloomberg, a UCITS-endorsed bitcoin ETF listing is unlikely to be approved due to strict requirements around diversification. A UCITS fund cannot have more than 10 per cent of its net assets in securities from a single issuer and this would stop a bitcoin ETF achieving approval from the regulator.
Last week the sector voiced its outrage at the SEC's rejection.
“The Winklevoss ETF proposal was rejected because the SEC found that the significant markets for bitcoin tend to be unregulated overseas markets that are potentially subject to price manipulation," said Jerry Brito, executive director of the Coin Center.
"But this creates a chicken and egg problem. How do we develop well-capitalised and regulated markets in the US and Europe if financial innovators aren’t allowed to bring products to market that grow domestic demand for digital currencies like Bitcoin?”
"Hopes that bitcoin would move towards mainstream finance have been dashed," added Charles Hayter, founder of CryptoCompare.