Bitcoin Spot ETF Officially Approved By US SEC —BTC Price Eyes $50,000 Retest

Key Insights:

• Bitcoin (BTC) Spot Exchange-Traded Fund (ETF) has finally been approved by the US Securities and Exchange Commission on Wed, Jan 10, 2024.
• CBOE Digital president John Palmer said that an approval will open the door to a new wave of institutional and, eventually, retail interest in Bitcoin derivatives.
• VanEck Director Gabor Gurbacs warns traders against overstated expectations of a massive short-term BTC price impact. 

Bitcoin (BTC) price received a massive boost as the United States Securities and Exchange Commission (SEC) issued a much-anticipated spot Bitcoin ETF approval on Wednesday, Jan 10, 2024.  Digital assets trading experts and crypto market analysts anticipate bullish BTC price action.

SEC Issues Clearance for Spot Bitcoin ETF on Regulated Trading Platforms 

The main securities regulator in the USA, the SEC issued a much-anticipated Spot Bitcoin ETF approval, putting a year-long debate to a positive conclusion. 

The move will allow investors in the United States to gain exposure to Bitcoin through a regulated and exchange-traded product. With the SEC’s approval of the Spot Bitcoin ETF, investors can now buy and sell shares of the ETF on major exchanges, providing them with a more accessible and traditional investment vehicle for participating in the cryptocurrency market. 

This development is expected to attract a broader range of investors who may have been hesitant to enter the crypto space directly. Additionally, the Spot Bitcoin ETF approval is seen as a significant step in the ongoing institutionalization of cryptocurrency assets within the mainstream financial system.

CBOE Digital Asset Manager Says Spot Bitcoin ETF Approval Paves Way for Pension Funds to Invest Billions into BTC

The Bitcoin Spot ETF approval effectively confers a figurative seal of legitimacy on BTC and the broader cryptocurrency markets. Ahead of the approval statement issued by the SEC, CBOE Digital president John Palmer had recently expressed confidence that the new approval will pave way for pension funds and regulated investment firms to inject billions into BTC. 

In a Jan. 2 interview with Bloomberg TV, John Palmer said that an he expects the approval to open the floodgates to a fresh wave of institutional and additional retail interest in Bitcoin derivatives.

 

Approval is going to pave the way for pension funds and RIA-based funds to be able to invest in assets in a spot Bitcoin ETF, said Jonh Palmer. 

An RIA is a company registered with federal or state regulatory agencies to provide investment advice. Without a defined regulatory framework, these regulated many funds had been restricted from gaining direct exposure to Bitcoin.

Palmer now expects Bitcoin derivatives products to expand significantly following the approval of a spot ETF. “Institutional players will now inevitably lean on those derivatives more and more” to hedge economic risks from the stock markets, he added.

VanEck Director Says Bitcoin Price Reaction ETF approval Could Disappoint BTC Holders

Conversely a section of market experts current anticipate a sell-the-news scenario, to pull down BTC price in the short-term.

The sell-the-new phenomenon describes a situation where a lot of investors rapidly sell off their holdings to take profits shortly after a much-anticipated bullish news event. 

VanEck Director of Digital Assets Strategy, Gabor Gurbacs recently made a twitter post in  support of this point of view. In a Dec 31 twitter post, he stated that bullish investors may be overestimating the initial impact of Spot Bitcoin ETFs.  

Gabor Gurbacs expects a only few $100 million inflows, of “mostly recycled” funds into the freshly created BTC securities product. 

However, he also doubled-down on the Dec 6 post where in highlighted the potential long-term bullish scenario where he predicted trillions of dollars flowing into Bitcoin markets as the ETF product becomes widely adopted. 

Gabor highlighted the Gold’s (XAU) triple digit growth performance in the years that followed Gold ETF launch in 2004, as a benchmark for Bitcoin’s potential long-term price action . 

Following the SEC clearance issued on Wednesday applicants are now expected to gear up for an official launch of BTC Spot ETF products from Jan 11. Prominent trading exchanges including Nasdaq, Cboe BZX, and NYSE Arca are lined up to float the Bitcoin derivative product.

Asset Managers Engaged with SEC For Last Minute “In-Cash” or “In-Kind” Creation Amendments 

Over the last 6-months least a dozen asset managers filled official applications to offer a spot Bitcoin ETF on various exchanges including Nasdaq, Cboe BZX, and NYSE Arca.

Initially, these applications were met with rigorous scrutiny by regulators over concerns market surrounding market manipulation. All parties we able to quickly resolve those early concerns through surveillance-sharing agreements to prevention market manipulation.

However, the asset managers still had to make critical last-minute amendments to their filings. Firms including BlackRock, VanEck, Valkyrie, Bitwise, Invesco, Fidelity, WisdomTree, Ark Invest and Grayscale all recently submitted amendments. 

Reuters reported that several applicants took part in a decisive joint conference call with the SEC on Dec. 21. The most recent discussions around Dec 29 clarified issued surrounding “in-cash” creations and redemptions as opposed to the initially proposed “in-kind” method. 

Most applicants had originally opted for the in-kind creations and redemptions, which would allow some authorized Bitcoin ETF participants to transact in BTC. However, this feature was knocked backed, with recent amendments instead emphasizing the in-cash models. 

Regardless, all spot Bitcoin ETF will require the fund or its partners to hold Bitcoin (BTC), thereby driving demand for the cryptocurrency.