Bitcoin and other cryptocurrencies investments have known a major rise in the past few months amid Bitcoin ETF anticipation. The enthusiastically expected Bitcoin ETF approval is likely in the next few hours. Even though some crypto enthusiasts see this approval as a huge opportunity for digital funds, others view it as a sell-the-news short-term situation.
How can we define ETF?
ETF is a financial material that permits investors to expend their exposure to the currency moves of the Bitcoin without explicitly keeping the asset itself. A Bitcoin ETF shares are traded on classic stock exchanges, which makes it simpler for traditional investors to part take in the cryptocurrency sale.
Bitcoin ETFs have attracted the attention of both institutional and retail investors, as they are known to offer a more appropriate and controlled way to make investments in Bitcoin. They can be considerably appealing to investors who are still skeptical about making direct purchases and managing cryptocurrencies due to their concern about regulatory issues, security and technical difficulties.
How Bitcoin ETFs growth will impact demand?
The Security and Exchange Commission, also known as SEC, currently has thirteen pending applications for spot Bitcoin exchange-traded funds (ETFs). Notable applicants in this space include BlackRock, ARK Invest, Grayscale Investment, Wisdom Tree, VanEck, Valkyrie, Invesco and Fidelity.
The approval of these ETFs is anticipated to significantly boost institutional demand for Bitcoin. The SEC will begin reviewing ETF applications from Jan. 5 to Jan.10 as noted by Bloomberg Intelligence ETF analyst James Seyffart on Dec.1.
These dates align with the deadlines for the application submitted by ARK Invest, led by Cathie Wood, as reported by Forbes. James Seyffart anticipates approval to occur between Jan. 8 and Jan. 10. He assigned a probability of 10% or less for the SEC to reject the filing by Jan. 10. Seyffart notes that the SEC has the technical capability to issue approval orders for at least nine applications before the specified window.
Finally. If this doesn't happen in this window (10% chance or less from @EricBalchunas & I). Either Gensler and SEC have gone nuclear. Orrr they just aren't ready and have somehow convinced @ARKInvest/@21Shares to withdraw their filing with some sort of future assurances.
— James Seyffart (@JSeyff) December 1, 2023
Anticipated Bitcoin ETF for Wednesday, but concerns arise about potential SEC Rug Pull
Amidst considerable speculations, an unfounded rumor circulated on Friday regarding the SEC approving a long-awaited Bitcoin ETFs, which turned out to be untrue. Instead, the attention shifted to an 11-page letter filed by Better Markets, linked to Senator Elizabeth Warren and SEC Chair Gary Gensler.
The letter cautioned the SEC against approving Bitcoin ETFs, labeling it a potentially "grave if not "historic mistake" that would endorse a market tainted with fraud and manipulation. This raised concerns amongst the crypto community, some even feared that this move might disrupt the approval process of the Bitcoin EFTs.
"It'd be so utterly fitting for crypto in general if Gary manages to figure out a way to rug everyone", Bloomberg analyst James Seyffart argued. The term "rug" in the common crypto slang stands for a sudden scam or trick.
Although imminent approval appears likely, uncertainties persist, raising two key unanswered questions. Firstly, the competition for dominance in the market remains uncertain. Secondly, the impact of SEC approval on Bitcoin's price remains unclear, adding another layer of suspense to the unfolding drama.
ETF's Approval to Directly Impact Bitcoin's Price
Despite the potential of the institutions, many analysts remain hesitant about the impact that the EFT's approval will have on Bitcoin prices. According to VanEck's 15 Crypto Predictions for 2024 report, the approval of a spot Bitcoin ETF is estimated to generate $310 million in inflows within the first few days, with a projection of $750 million within a quarter and $40.4 billion over the first two years.
Matthew Sigel, head of digital asset research at VanEck, anticipates Bitcoin taking "significant market share" from gold. This influx into approved spot ETFs is expected to provide support for BTC value. Sigel suggested that despite potential volatility, the price of BTC is unlikely to fall below $30,000 in Q1 2024. Michael Sonnenshein, CEO of Grayscale Investments, believes that a spot Bitcoin ETF, once approved, could unlock approximately $30 trillion in advised wealth.
On Tuesday, hackers took control of SEC's official X account to publish a series of tweets alleging the approval of the highly anticipated exchange-traded funds. The fake tweet confirming Bitcoin EFT's approval caused an immediate spike in BTC prices. In fact, they went from $46,800 to $47,680, before then retraced down to $45,400 when the post was proven to be unfounded and later got erased from the platform.