Bitcoin ETF approval anticipation fuels bullish market sentiment
The recent spike in Bitcoin (BTC) price on Monday can be attributed to a false report of the U.S. Securities and Exchange Commission (SEC) approving BlackRock’s spot Bitcoin exchange-traded fund (ETF). This event not only raised concerns about manipulation and surveillance but also revealed the presence of substantial funds waiting to enter the market upon ETF approval. This challenges the belief that approval has already been factored into the market.
A glimpse of potential market reactions
The temporary pump resulting from the fake news provided a glimpse of what could happen when BTC spot ETFs are approved. The fact that BTC is holding above $28k suggests that the market may be under-invested and inclined to start building positions.
Speculation is high that the SEC could approve the first U.S.-based spot ETF early next year, following a missed deadline to appeal a court verdict against rejecting Grayscale Investments’ attempt to convert the Grayscale Bitcoin Trust (GBTC) into a spot ETF. With the SEC engaging with other ETF issuers, spot ETF approvals seem highly likely, potentially occurring within the next 83 days.
Impact of Bitcoin ETF approval on BTC price
Analysts believe that once ETF approval happens, the BTC price will experience a rapid increase. The timeline for approval remains uncertain, but it is seen as a matter of “when” rather than “if.” This anticipation has led to a bullish bias in the market, as reflected in the pricing of BTC options. The call-put skews for 30- and 60-day durations have risen above zero, indicating a favorable outlook.
Similar improvements can be seen in the ether options market, although the bias for calls is relatively weaker compared to Bitcoin. The false report of a Bitcoin ETF approval highlighted the potential for a bullish market sentiment and the presence of substantial funds waiting to enter the market upon approval.
Factors influencing Bitcoin ETF approval
There are several factors that the SEC will consider before granting approval for a Bitcoin ETF. These include the potential for market manipulation, the maturity of the market, and the ability of the ETF issuer to provide accurate and transparent pricing information. The SEC has previously rejected several applications for Bitcoin ETFs, citing concerns about market manipulation and the lack of a regulated market for the underlying asset.
However, the cryptocurrency market has evolved significantly in recent years, with increased regulatory oversight and the emergence of more sophisticated market participants. This has led many to believe that the SEC may be more amenable to approving a Bitcoin ETF in the near future.
Conclusion
In summary, the false report of a Bitcoin ETF approval highlighted the potential for a bullish market sentiment and the presence of substantial funds waiting to enter the market upon approval. Speculation is high for spot ETF approvals next year, which could lead to significant BTC price gains. The market is currently showing a favorable bias, as reflected in the pricing of BTC options.
As the cryptocurrency market continues to mature and regulatory oversight increases, the likelihood of a Bitcoin ETF approval grows. Investors and market participants should keep a close eye on developments in this space, as an approved ETF could have a significant impact on the price of Bitcoin and the broader cryptocurrency market.
