SEC Approved Bitcoin ETFs: Bitcoin's Reaction and Future Behavior
SEC has approved the first Bitcoin ETFs, Bitcoin price has reacted insignificantly, but the most interesting is yet to come, experts claim.
11 Years of Struggle: SEC Approves Bitcoin ETFs
The U.S. Securities and Exchange Commission has approved the first 11 applications to create a spot Bitcoin ETFs from various issuers, including BlackRock, Ark Investments/21Shares, Fidelity, Invesco and VanEck. Trading is expected to begin as early as January 12. A significant milestone that will mark the beginning of Bitcoin's institutionalization.
The Commission approved several applications at once to avoid giving one issuer or another an advantage in the market. All 11 issuers provide a similar principle for their new product, but they are distinguished by minor features such as fee levels, for example. The success of a particular issuer will depend on fees and liquidity.
Interestingly, Gensler, a Democrat and vocal opponent of cryptocurrencies, joined two Republicans who voted in favor of approving the Bitcoin ETFs.
Bitcoin ETFs will enable more market participants, particularly institutional players, and allow them to utilize Bitcoin without owning it directly. Over the past 11 years, many players such as BlackRock have been hesitant about cryptocurrencies due to the lack of clear local legislation. While there is still no such legislation, the Commission's approval of spot Bitcoin ETFs is reassuring as exchange-traded funds are standardized financial instruments with clearer management.
The approval of ETFs has made access to Bitcoin easier. This democratization has opened the doors to traditional investors. And according to experts' expectations, it will bring Bitcoin ETFs a multi-billion dollar profit. Standard Chartered believes that ETFs will be able to raise between $50 billion and $100 billion as early as this year. For the ETF industry as a whole, the emergence of a new product is also a milestone. In addition to the arrival of a greater number of investors, new innovative cryptocurrency products are expected to be introduced. Some companies have already applied for Ethereum ETFs.
Still, the SEC's latest concession is not proof that the commission will soften its policy toward the cryptocurrency market. Gensler reiterated his longstanding assertions that Bitcoin is a commodity, not a security. This means that the regulator will not stop its crackdown on other cryptocurrencies.
Bitcoin reaction and forecast
As it turned out, the final SEC decision had a minor impact on Bitcoin's pricing dynamics. The reaction of the main cryptocurrency was restrained, as immediately after the announcement BTC briefly jumped by 1.8% to $47,600, and then returned to the initial position. What can't be said about Ethereum, whose price jumped 17% to $2,590 amid the news.
At the time of writing, BTC is trading at $46,240.
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From a technical perspective, Bitcoin formed a daily high around $47,699 after ETF approval, and pulled back, showing bearish signs. The nearest resistance level is at $47,000. However, a break above $47,350 would spur the asset to further gains. In that case, BTC could reach a new resistance level of $48,000 in the near term.
On the downside, traders may fail to hold the asset at $47,350 and then BTC will start falling to support levels of $46,550, $46,000 and $45,150 in the near term.
Many analysts believe that the real reaction of Bitcoin is yet to be seen. However, there are several opinions on this matter. Either it will happen in the short term after the first issuers launch their operations, or it will happen over time, as the flow of new institutional players into the market will be gradual.
For example, Bloomberg expects a record inflow of $4 billion on the first trading day.
@BlackRock may break the first-day flow record with a possible $2 billion asset injection on the first day of trading for its US spot Bitcoin ETF, according to BI's senior ETF analyst @EricBalchunas Seed funding could combine with grassroots interest to give it momentum in a… pic.twitter.com/cjUoSzsqgt
— Bloomberg Intelligence (@BBGIntelligence) January 10, 2024
Standard Chartered, which predicted an inflow of $50-100 billion, believes that the price of Bitcoin may well reach the $200,000 mark in 2025. Other analysts, citing Bloomberg forecasts, have estimated that Bitcoin could trade around $50,000-$57,000 as early as this week.
For anyone wondering, #Bitcoin price has not moved because:
— British HODL ❤️🔥🐂❤️🔥 (@BritishHodl) January 11, 2024
1. Leverage was wiped out yesterday.
2. Everyone who wanted in before ETF, seems to be in.
3. Only after 9.30am tomorrow can the ETF’s actually start accepting capital and thus start acquiring #Bitcoin.
Just because…
This is not a 100 percent statement. The cryptocurrency market is known for its increased volatility and unpredictability. Remember the importance of DYOR.
