Bitcoin rose 6% to $45,168.6 by 21:35 ET (02:35 GMT), reaching its highest level since early-April 2022. But trading volumes remained slim on account of the New Year holidays.

Bitcoin’s gains came as an extension of a stellar recovery in 2023, where the token surged more than 100% in value after starting the year at around $17,000.

The cryptocurrency’s recent gains were driven chiefly by speculation over the approval of a U.S. ETF that directly tracks the token’s prices. The SEC has a January 10 deadline to approve or reject a spot ETF application from Ark and 21 Shares, according to a Reuters report. The ruling could set the precedent for ETF applications from several other fund managers for a similar product.

The Reuters report also said that the SEC will notify other applicants by as soon as this week on whether they have been cleared to launch their products by Jan 10.

BlackRock Inc (NYSE:BLK)- the world’s largest asset manager- has also applied for a spot bitcoin ETF.

The SEC has repeatedly rejected applications for a spot bitcoin ETF over the past two years, citing concerns that the token’s decentralized and volatile nature will prevent fund managers from protecting investors against market manipulation. Currently, all U.S.-traded bitcoin ETFs track the futures of the token, which are traded on the Chicago Mercantile Exchange.

Grayscale, which currently operates the GBTC (OTC:GBTC) ETF, has an application to convert the product into a spot ETF. The firm had marked a legal victory against the SEC over its repeated rejection of a spot ETF, which saw the regulator reconsider Grayscale’s application.

Proponents of the cryptocurrency argue that the approval of a spot ETF will spur a deluge of capital inflows for bitcoin, given that the product allows traders to invest in the token without directly holding cryptocurrency.

But analysts have cautioned that the approval may not trigger as large a bull run as expected, especially given that the crypto industry is still grappling with a massive loss of faith over the past two years.

A series of high-profile bankruptcies, coupled with a regulatory crackdown against the world’s biggest crypto firms largely dented retail interest in crypto. This saw bitcoin slump to as low as $15,000 by late-2022.

While hopes for an ETF approval drove a strong recovery for the token through 2023, trading volumes remained at a fraction of those seen during the 2021 bull run. High interest rates also limited the amount of capital flowing into crypto.