Will the Bitcoin Spot ETF Be Approved and How Will It Impact the Market? This article explores the positive and negative effects of this decision on the Bitcoin price, allowing readers to judge whether the bullish or bearish forces have the advantage. This article is sourced from Reed Macdonald.
Article, compiled, translated, and written by Block Beats.
(Background information: Matrixport Manipulating the Bitcoin Market? Founder Wu Jihan: Changing Faces Faster Than Flipping Books is an Advantage)
Summary:
Last night, Matrixport’s report stated that due to all applications failing to meet key requirements, it is expected that the SEC will reject all proposals in January. With this news, liquidations across the network increased by $451 million in just one hour.
Why does the SEC’s final decision on the Bitcoin Spot ETF cause such a huge reaction in the cryptocurrency market? Cryptocurrency researcher Reed Macdonald reviews the history of Bitcoin’s relationship with ETFs in recent years, pointing out the uncertainty of Bitcoin’s future trend after the SEC’s decision and emphasizing the importance of considering broader market dynamics. BlockBeats translates the original text as follows:
In 2023, Bitcoin’s price increase of over 150% has attracted great attention on Wall Street, leading companies to rush to launch the world’s first Bitcoin ETF.
Currently, all attention is focused on the decision by the U.S. Securities and Exchange Commission (SEC) regarding the approval of the Bitcoin Spot ETF, which is planned to be listed on January 10th.
If past events can provide some reference, this decision will have a significant impact on the price of Bitcoin, although it is still unknown whether it will be positive or negative.
Supporters of the Bitcoin ETF believe that if approved by the SEC, it will bring a lot of opportunities for institutional and retail investment, driving the Bitcoin price to new highs.
History provides us with an insight into how ETFs are expected to impact the price of Bitcoin.
In 2017, the price of Bitcoin soared to over $1,400, partly due to expectations for the first Bitcoin ETF. This was an increase compared to the previous year’s low of around $600.
At that time, investors believed that the introduction of the Bitcoin ETF would make it easier for institutional funds to enter the market, triggering a buying frenzy. However, the SEC ultimately rejected the proposal, leading to a sharp decline in the price of Bitcoin.
Within a few days, the price of Bitcoin fell back below $1,000. However, ultimately, the launch of Bitcoin futures in 2017 brought new attention to the market, with prices soaring to over $20,000 that year.
From the announcement to the listing of CME Bitcoin futures, the price rose.
For example, we can fast forward to 2021 when Bitcoin once again reached a new all-time high of over $60,000.
This time, the rise was partly driven by the successful launch of Bitcoin futures ETFs in Canada and Europe. These ETFs allow investors to gain exposure to Bitcoin without directly holding the cryptocurrency. Expectations for similar products being launched in the United States fueled bullish sentiment.
Finally, earlier this year, false approval news of an ETF caused the price of Bitcoin to rise by thousands of dollars within minutes, indicating that once approved, it could bring about volatile price fluctuations.
False news of ETF approval led to a surge in Bitcoin’s price.
On the other hand, some believe that the approval of the Bitcoin ETF could trigger price corrections.
Some market experts are concerned that the ETF could become a target for short sellers, leading to increased volatility, or the ETF could become a “sell the news event.”
In addition, the approval of the Bitcoin ETF could subject the entire cryptocurrency market to stricter regulatory scrutiny. This enhanced regulation could lead to increased taxes, higher reporting requirements, and potential limitations on Bitcoin usage, which could dampen investor enthusiasm.
Furthermore, some believe that the market may have already priced in the possibility of Bitcoin ETF approval, and any decision to reject it could result in disappointment and a sell-off similar to when the Winklevoss Bitcoin ETF was rejected in 2017.
Bitcoin’s price suffered a sell-off after the rejection of the ETF in 2017.
The Bitcoin community eagerly awaits the SEC’s final decision, but it is important to remember that this is just one of many factors influencing the price of Bitcoin.
Market sentiment, macroeconomic conditions, and geopolitical events will also play a role in shaping the future of Bitcoin.
Overall, the price of Bitcoin is at a crossroads, and investors are waiting for the SEC’s decision on the Bitcoin ETF.
While past events suggest that ETF expectations can have a significant impact on Bitcoin’s price, considering broader market dynamics is crucial. Whether the price of Bitcoin rises or falls after the SEC’s ruling will depend on many factors, including how the market interprets and reacts to the decision.
As the crypto world holds its breath, the future of Bitcoin remains uncertain, but there is no doubt that this is a critical moment for the world’s only decentralized cryptocurrency.
Further reading:
K33 Analyst: Bitcoin Spot ETF Approval Could Lead to “Over 70% Price Decline,” 5% Chance of SEC Rejection
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