A sudden 10% spike in the value of BTC early this week provided traders with a brief glance at the potential ramifications of a forthcoming decision by the U.S. Securities & Exchange Commission (SEC) regarding the approval of a spot Bitcoin ETF launch.
The spike was triggered by a misinformed report, which falsely claimed that BlackRock Inc. had obtained the green light to initiate a spot ETF propelling the largest cryptocurrency to $30,002 on Monday, marking its highest price point since March. However, the euphoria was short-lived, as BlackRock clarified that its ETF application was still pending, ultimately leaving Bitcoin at a modest 4.4% higher for 16th October.
BlackRock is just one of several firms fervently vying to be the pioneers in offering the first-ever spot Bitcoin ETFs in the United States. The prevailing sentiment suggests that the SEC’s longstanding resistance to such financial products may be on the verge of dissolving. Proponents of these ETFs argue that their approval would greatly accelerate the widespread adoption of cryptocurrencies.
Bloomberg Intelligence ETF analyst James Seyffart compared this sudden Bitcoin surge to a practice run for the market dynamics that would come into play should these ETFs gain approval. Seyffart confidently expressed his anticipation that a slew of spot Bitcoin ETFs would receive the green light by a January deadline.
The noteworthy swings in Bitcoin’s value punctured, albeit momentarily, a period of unusually low volatility, which reflected a waning interest from buyers. Numerous investors had previously abandoned the world of digital currencies following the tumultuous events of the previous year, most notably the implosion of FTX exchange, co-founded by Sam Bankman-Fried, who currently finds himself on trial for a multibillion-dollar fraud.
According to Coinglass data, the past 24 hours saw approximately $95 million worth of Bitcoin positions liquidated, primarily by traders who had been betting on the cryptocurrency’s prices plummeting.
Now, with tangible progress on the ETF front, some experts are predicting an impending shift in the market sentiment. Noelle Acheson, the author of the Crypto Is Macro Now newsletter, believes that individuals might start considering Bitcoin as a hedge against the unpredictable and turbulent global geopolitical and economic landscape.
The topic of spot ETFs has consistently acted as a catalyst for some of Bitcoin’s most noteworthy rallies throughout 2023. Back in June, the digital asset scaled the $30,000 mark when heavyweight financial players like BlackRock and Fidelity Investments expressed their intent to seek SEC approval for launching such funds. However, the cryptocurrency retraced to around $26,000 shortly after.
Another surge occurred in late August, thanks to a U.S. court ruling that potentially paved the way for the $17.7 billion Grayscale Bitcoin Trust to transition into an ETF.
The SEC’s Role The SEC’s stance on the crypto sector has been increasingly stringent in the past year. The regulator had steadfastly resisted the approval of spot Bitcoin ETFs, citing concerns about fraud and market manipulation within the cryptocurrency’s spot market. In a bid to provide clarity, the SEC pointed out the importance of relying on accurate information and warned against believing unverified reports on the internet.
The likelihood and timing of spot ETF approvals are still a matter of intense debate. Although ETFs based on Ether futures were introduced in the U.S. in October, they struggled to gain significant traction, casting doubts on the narrative of an inevitable expansion in cryptocurrency adoption.
The potential approval of spot Bitcoin ETFs has many enthusiasts speculating that Bitcoin’s price could surge to approximately $32,000. Nevertheless, the ultimate question remains about when this approval will materialize. And even if it does, Bitcoin may face formidable resistance at range highs, meaning it might not breach those highs upon its initial testing.
As of 6:42 a.m. in London on Tuesday, Bitcoin had dipped approximately 1% to $28,180. While Bitcoin has posted a respectable 70% gain this year, it still lags significantly behind its historic 2021 peak, which was nearly $69,000.
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