Awaiting the Approval: Will Bitcoin ETFs Impact BTC Price?
A highly anticipated event in the cryptocurrency market revolves around the potential approval of spot Bitcoin exchange-traded funds (ETFs). Traders and investors are speculating on whether this development will lead to increased demand for Bitcoin (BTC) and subsequently drive up its price.
Two consecutive rumors, both debunked later, sparked significant surges in BTC price. The first rumor falsely claimed that BlackRock’s ETF had been approved, while the second suggested that BlackRock’s Bitcoin ETF ticker had been added to DTCC’s list. However, it was discovered that the ticker had been present since August 2023.
Naturally, skepticism and controversy have arisen within the crypto community following these “buy the rumor, sell the news” events surrounding a potential BTC-based product approval by a financial giant.
Has the Market Already Priced in a Bitcoin Spot ETF Approval?
To gain insights into what lies ahead, Finbold posed a question to ChatGPT about whether an approval event for Bitcoin spot ETFs has already been factored into the market. The query asked if there would be an increase in demand after approval or if it had already been priced in.
“What is the expected market capitalization for Bitcoin (BTC) if the Bitcoin spot ETFs get approved by the SEC? Consider public data from October 26, 2023. Bitcoin’s market capitalization is at $666 billion right now, and rumors about this approval have been circulating for months. Is this event already priced in, or should we expect another increase in demand after it happens?”
— Prompt by Finbold
In this experiment, a Telegram bot equipped with a ‘pay-per-prompt’ GPT-4 API was utilized to provide answers, with the ability to accept cryptocurrency payments.
ChatGPT’s Perspective on Bitcoin Spot ETF Approval
The ChatGPT bot expressed optimism about an approval leading to increased demand, thereby positively impacting Bitcoin’s market capitalization. According to the artificial intelligence (AI), BTC’s market cap could potentially surpass $673 billion at the time of the prompt.
“If Bitcoin spot ETFs get approved by the SEC, it’s likely we’ll see a significant increase in demand for Bitcoin, leading to an increase in its market capitalization.”
— ChatGPT-4
However, the AI also acknowledged that price changes may not be as substantial as those seen during unexpected events. It mentioned the phenomenon known as “buy the rumor, sell the news” and stated that determining the extent to which this event has been priced in without comprehensive data is challenging.
“Much might already be priced in due to the rumors and anticipation of this event. This is a common phenomenon in markets known as ‘buy the rumor, sell the news’. However, the extent to which it’s priced in is hard to determine precisely without more exhaustive data.”
— ChatGPT-4
Considerations and Potential Market Impact
The bullish case presented by ChatGPT takes into account the approval of Bitcoin Futures ETFs by the SEC in October 2021, just before BTC reached its all-time high of $69,000. It’s important to note that Bitcoin was already experiencing a bull market at that time, with much already factored into its price.
“The actual market capitalization after approval would largely depend on how many investors are attracted to the ETFs and how the broader crypto market reacts. Considering the effect of Bitcoin futures ETFs approval, which led to significant growth, we can expect quite a significant surge. The overall context of the crypto market and macroeconomic factors would also have an impact.”
— ChatGPT-4
In addition, previous instances of post-approval price action have marked the onset of a two-year bear market, characterized by substantial sell-offs from institutional investors, Bitcoin miners, and retailers who had accumulated BTC prior to the trend reversal.
To summarize, while artificial intelligence predicts an increase in Bitcoin’s market capitalization after approval, it acknowledges that quantifying the exact surge is challenging due to various influencing factors. Volatility can be expected around the time of the announcement, and investors should monitor broader market trends when making decisions.
Hot Take: Awaiting the ETF Approval and Its Potential Implications for Bitcoin
The cryptocurrency community has been eagerly awaiting the approval of spot Bitcoin ETFs, speculating on the impact it may have on BTC’s price. Recent rumors have fueled excitement, but skepticism remains due to past instances of false information. ChatGPT-4 provides insights into this matter, suggesting that while some anticipation may already be priced in, an approval could still lead to increased demand and positively influence Bitcoin’s market capitalization. However, the extent of this impact is difficult to determine without comprehensive data. It is essential for investors to brace for potential volatility and stay informed about wider market trends before making decisions.
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