Bitcoin experienced a rollercoaster ride earlier this week, dropping to around $45,000 on Tuesday, and then recovering after a false SEC post on the US Securities and Exchange Commission’s X account claimed the approval of ETFs holding the digital asset.
“The SEC’s @SECGov X/Twitter account has been compromised,” a spokesperson said in a statement. “The unauthorized tweet regarding Bitcoin ETFs was not made by the SEC or its staff.” CoinDesk
The SEC clarified that it had not approved spot-Bitcoin exchange-traded funds and revealed that the X account had been compromised. This unexpected cybersecurity incident caught market participants off guard, impacting Bitcoin’s price.
As noted, Bitcoin’s price plummeted to $45,000 before rebounding and reaching $45,900 as of 7:20 a.m. in London on Wednesday. Just the day before, the cryptocurrency had surged to a 21-month high of over $47,000 amid growing optimism about the imminent approval of ETFs. Ophelia Snyder, president of 21Shares, downplayed the incident, stating, “I don’t think it will affect the process or what comes next.”
The saga continues as the SEC faces a deadline to address the ARK 21 Shares application by the end of Wednesday. Analysts anticipate multiple approvals following last-minute adjustments to offering statements. Nate Geraci, president of The ETF Store, remarked, “Just add this to the long list of surprising plot twists and turns in the 10-plus year effort to bring a spot Bitcoin ETF to market.”
SEC Chair Gary Gensler’s scepticism toward cryptocurrencies and his focus on addressing fraud and misconduct within the crypto sector have raised uncertainty. However, a legal setback against Grayscale Investments last year has fuelled speculation that the SEC may have to concede to spot ETFs.
Bitcoin has rallied 163% over the past year, driven by anticipation of ETFs making the token a more mainstream investment. However, some analysts warn of a potential ‘sell-the-news’ reaction if the SEC approves spot ETFs, with speculators possibly opting to cash in profits. Tony Sycamore, a market analyst at IG Australia Pty, emphasized the risk, saying, “Bitcoin’s drop after the false SEC post shows the risk of an eventual ‘sell-the-news’ reaction.”
Amid the ongoing Bitcoin volatility, Standard Chartered Bank predicts substantial inflows into Bitcoin ETFs if the SEC approves them. The bank anticipates inflows of $50 billion to $100 billion this year, translating to the addition of 437,000 to 1.32 million bitcoins in U.S. ETFs by the end of 2024.
If these predictions materialize, Bitcoin’s price could soar to levels nearing $200,000 by the end of 2025, according to Standard Chartered. The bank draws a parallel to the launch of the first U.S.-based gold exchange-traded product, which triggered a fourfold increase in the price of gold over seven years.
Industry insiders, including Will McDonough, chairman and founder of Corestone Capital, foresee substantial demand for a Bitcoin ETF if approved. McDonough predicts around $1 billion worth of inflows by the end of the first quarter of this year, highlighting the significance of a 40 Act structure for investors.
Galaxy Digital also weighed in, projecting significant inflows for ETFs in their initial years of issuance. The report suggests potential inflows of $14.4 billion in the first year, with projections rising to $27 billion and $39 billion in the second and third years, respectively.
As previously reported by CoinPayments Media, Galaxy Digital’s founder, Mark Novogratz anticipated a surge in Bitcoin by the end 2023. At that time, he expressed confidence in the approval of a Bitcoin ETF.
The crypto market enthusiastically awaits the SEC’s announcement, which looks set to reshape the landscape of digital asset investments.
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