Bitcoin Declines as Crypto Market Awaits SEC News on ETFs
Bitcoin experienced a decline on Friday as the crypto market awaited news from the Securities and Exchange Commission (SEC) regarding its review of spot ETF applications. The price of Bitcoin dropped 1.6% to $43,442. Despite this, ETC Group’s Head of Research André Dragosch believes there is substantial evidence supporting the potential approval of a spot Bitcoin ETF in January. Several applicants, including Grayscale, Ark Investments, Valkyrie, and VanEck, filed new forms signaling progress towards potential approval. The Grayscale Bitcoin Trust discount to net asset value has also narrowed sharply in the past week, suggesting investor belief in the conversion of the fund into an ETF.
Factors Supporting Spot Bitcoin ETF Approval
Dragosch pointed out other factors that support a positive outlook for the approval of a spot Bitcoin ETF this month. The SEC recently held meetings with major exchanges to finalize comments on spot Bitcoin ETFs, and Fidelity filed a registration for its own spot Bitcoin ETF with the SEC. Additionally, ETC Group’s Cryptoasset Sentiment Index (CSI) remains elevated despite the recent sell-off in the Bitcoin market. The CSI currently signals a positive sentiment, with most indicators above their short-term trend.
Increased Market Volatility and Expectations
An analyst report earlier this week suggested that the SEC might not be ready to approve a spot fund yet, but market observers like Bloomberg Intelligence analyst Eric Balchunas have challenged this claim. Balchunas stated that there is no indication of anything but approval and expects potential approval orders next week. Bittrex Global CEO Oliver Linch believes that a spot Bitcoin ETF approval is already priced into markets and that it may not have a dramatic impact initially but could contribute to a successful 2024 alongside the Bitcoin Halving.
Hot Take: Spot Bitcoin ETF Approval Expected Soon
The crypto market eagerly awaits news from the SEC regarding the potential approval of spot Bitcoin ETFs. Despite the recent decline in Bitcoin’s price, there is substantial evidence and positive sentiment supporting the approval of a spot Bitcoin ETF in January. Several applicants have made progress towards approval, and the narrowing discount of the Grayscale Bitcoin Trust indicates investor confidence in its conversion into an ETF. Meetings between the SEC and major exchanges, as well as Fidelity’s registration for a spot Bitcoin ETF, further support the expectation of approval. Market volatility has increased, but analysts and industry insiders remain optimistic about the potential approval orders coming soon.
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