[1/4]Representation of the bitcoin cryptocurrency and a price chart are seen in this illustration taken October 24, 2023. REUTERS/Dado Ruvic/Illustration Acquire Licensing Rights

LONDON/SINGAPORE/NEW YORK, Oct 24 (Reuters) - Bitcoin rose by nearly 10% on Tuesday to $34,872, its highest in nearly a year-and-a-half, on mounting speculation that an exchange-traded bitcoin fund is imminent.

That followed a 10% surge on Monday, when bitcoin posted its best day in almost a year, and the bullishness spread across the wider crypto market and into related stocks.

Any approval by the U.S. Securities and Exchange Commission (SEC) of an exchange-traded fund (ETF) that owns bitcoin on behalf of fund investors is predicted to fuel demand.

A spot bitcoin ETF, the argument goes, would allow previously wary investors access to crypto via the stock market, ushering a new wave of capital into the sector.

Bitcoin, a volatile asset whose price has doubled so far this year, was last up 7.87% at $34,020, the highest level since May 2022. It traded above $35,000 in Asia trading hours. The second-largest cryptocurrency, ether , climbed 4.50% to $1,786.30, its highest since August.

Crypto-linked shares such as major U.S. exchange Coinbase Global (COIN.O) and bitcoin owner MicroStrategy (MSTR.O) gained more than 7% and 12%, respectively.

"A sense of excitement has erupted in the crypto market and now it’s just a case of waiting to see if and when something concrete emerges from the SEC," Antoni Trenchev, co-founder of digital asset firm Nexo, said in an emailed statement.

Investment giant BlackRock (BLK.N) is among several major U.S. financial firms with pending applications for bitcoin ETFs.

Speculation on their likely approval was fuelled by BlackRock's iShares ETF listing on the website of clearing house DTCC. It was unclear when or why the iShares ETF was added to the DTCC list. DTCC and BlackRock did not immediately respond to requests for comment.

Anticipation also grew after reports this month, including from Reuters, that the SEC won't appeal a court ruling that found the agency had been wrong to reject an ETF application from crypto firm Grayscale Investments. On Monday, the court formalized its ruling, sending the application back to the SEC for review.

"The SEC being pressured by the courts increases the probability" of an ETF approval, said Standard Chartered's head of digital assets research Geoffrey Kendrick.

Data on crypto derivatives analysis site Coinglass showed heavy bitcoin short-covering in the last 24 hours.

Reporting by Tom Wilson and Elizabeth Howcroft in London, Tom Westbrook and Rae Wee in Singapore, Brigid Riley in Tokyo and Chibuike Oguh in New York Editing by Shri Navaratnam, Simon Cameron-Moore, Michelle Price and Cynthia Osterman

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