Anticipation Builds as Bitcoin ETF Nears Approval, But What If It Doesn’t Meet Expectations?
Bitcoin’s value has surged recently as there is growing anticipation that the first-ever US exchange-traded funds (ETFs) directly linked to the cryptocurrency will receive approval. However, amidst this optimism, an important question arises: what happens if the Bitcoin ETF fails to meet the high expectations set for it?
Bitcoin’s Price Surge Amid ETF Speculation
This week, Bitcoin has experienced a 16% increase in value, surpassing $35,000. This remarkable rise stands in contrast to a struggling global stock market influenced by elevated Treasury yields and deepening geopolitical tensions.
Supporters of digital assets argue that the introduction of spot ETFs by industry giants like BlackRock Inc. will accelerate wider Bitcoin adoption. However, the timing of approval from the cautious Securities and Exchange Commission (SEC) remains uncertain. Additionally, recent events such as the bankruptcy of the FTX exchange have cast a shadow over the broader cryptocurrency market.
Analysts Predict Uncertainty Surrounding Approval of Bitcoin Spot ETF
Bloomberg Intelligence analyst Eric Balchunas predicts that there may be a gap between the initial hype and actual demand when a Bitcoin ETF starts trading on a stock exchange. He also suggests that the performance of a Bitcoin ETF might not mirror the impressive launch of the first cryptocurrency futures ETF two years ago.
Cici Lu McCalman, Founder of Venn Link Partners, believes that if US spot Bitcoin ETFs are approved, there may be short-term selling. However, these products could have a bullish effect on Bitcoin in the long run.
JPMorgan Chase & Co. researchers expect the SEC to approve multiple spot Bitcoin ETFs by January 10. However, any potential rejection could lead to legal challenges against the SEC, adding another layer of complexity to the regulatory landscape.
Bitcoin’s Overbought Rally
Chart patterns indicate that Bitcoin’s rally may have become overstretched, and options bets suggest that some speculators anticipate Bitcoin reaching $40,000 before facing significant resistance. Currently, Bitcoin is trading steadily at $34,090.
Technical Indicator Challenge
Fibonacci ratios, commonly used to identify market reversals, highlight a zone just below $36,000 as a potential obstacle to Bitcoin’s upward momentum. This zone corresponds to the 38.2% Fibonacci retracement of Bitcoin’s year-long decline through November 2022.
Overextended RSI
Bitcoin’s weekly relative-strength index (RSI), a measure of momentum, has surpassed the 70 level for the first time since 2021. A reading above 70 is generally considered “overbought,” suggesting a reduced likelihood of experiencing rapid rallies seen in the past.
The future of the Bitcoin ETF remains uncertain, but its approval or rejection by the SEC will undoubtedly have significant implications for the world of digital assets.
Hot Take: The Impact of Bitcoin ETF Approval or Rejection
The approval or rejection of the Bitcoin ETF by the SEC will have far-reaching consequences for the cryptocurrency market. If approved, spot Bitcoin ETFs could accelerate wider adoption and potentially lead to long-term bullish trends for Bitcoin. However, there may be short-term selling if these ETFs are given the green light.
On the other hand, if the SEC rejects the Bitcoin ETF applications, it could result in legal challenges and create further complexity in the regulatory landscape. Either way, the anticipation surrounding the decision demonstrates the growing importance of Bitcoin and its potential impact on the financial world.
Source: CoinPedia
By
By
By
By