Why Spot Bitcoin ETF Approval Matters
Crypto index fund manager Bitwise argues that there are three compelling reasons why the approval of a spot Bitcoin Exchange Traded Fund (ETF) is important:
- Approval would make it easier for investment professionals to gain exposure to bitcoin.
- ETFs offer better price efficiencies compared to other products.
- A spot bitcoin ETF would be seen as a regulatory stamp of approval, signaling the market’s maturity.
Spot ETF Optimism and Bitcoin’s Downside
Optimism regarding spot Bitcoin ETF approvals has been prevalent in the market. However, recent factors have contributed to Bitcoin’s decline:
- Macroeconomic headwinds, such as rising US yields, have weighed heavily on the Bitcoin price.
- Bearish technical developments, including the break of key support levels, have further exacerbated the price drop.
- Spot Bitcoin ETF approvals are unlikely until late 2023 or early 2024, providing limited bullish momentum in the near term.
Long-Term Outlook and Dip Buyers
Despite the current fragile near-term outlook, many predict that Bitcoin will reach new all-time highs in 2024 due to spot ETF approvals, the Bitcoin halving, and potential Fed rate cuts. Dip buyers are expected to enter the market as Bitcoin approaches $20,000.
Hot Take
While the approval of a spot Bitcoin ETF is highly anticipated, it may not be enough to save Bitcoin from further downside in the short term. However, the longer-term outlook remains compelling, with potential catalysts on the horizon.
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