Key Takeaways:
- Bitcoin rises by 7.8% in less than 24 hours to cross $45,000 for the first time since April 2022
- Experts believe the catalyst behind the latest rally could be the potential date of approval for the spot Bitcoin ETF edging closer.
- BlackRock, Fidelity, Bitwise, ARK Invest among 14 firms await SEC approval for BTC spot ETFs.
As the crypto market prepares for the highly expected approval of a spot Bitcoin exchange-traded fund (ETF) in the United States, the world’s leading cryptocurrency blew past the $45,000 marker for the first time in almost two years.
According to CoinMarketCap’s data, on January 1, Bitcoin (BTC) surged by more than 6% from $42,000 to cross $45,000 in less than 24 hours. In the process, BTC hit its highest valuation since April 2022, climbing 170% year-to-date.
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Bitcoin is currently trading higher than any price it reached during the entirety of 2023, setting a higher standard for the crypto asset entering the new year.
The cryptocurrency’s surge also comes at a time when anticipation that the US Securities and Exchange Commission (SEC) will green-light the listing of several spot Bitcoin ETFs is on the rise.
Experts believe the news could have been the catalyst behind the latest surge as the deadline for deciding on the funds is soon approaching on January 10.
As per a report by Reuters, the securities regulator could start notifying Bitcoin spot ETF applicants including BlackRock, Fidelity, Bitwise, and ARK Invest, as soon as Tuesday, January 2, about the approval status of their products.
Currently, there are 14 applications for a Bitcoin-focused spot market-traded product pending a decision from the SEC.
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Experts Remain Divided About the Impact of ETF Approval on Bitcoin Price
However, market experts remain divided over the potential impact the ETF approval could have on the Bitcoin market in the short term.
Analysts from on-chain data aggregator CryptoQuant suggested in a report last week that BTC prices could face downside pressure if the SEC approves the ETF as investors may rush to liquidate their positions to rake in profits.
The report described it as a potential “sell the news” event where an asset’s price and market sentiment rise in the lead-up to a bullish event only for it to tumble shortly after it occurs.
Meanwhile, analysts from the crypto options trading platform Greeks live claim that BTC won’t necessarily experience a rally on the day the exchange-traded product (ETP) may be approved, due to reduced volatility in major term implied volatilities (IVs) and prices.
Term IV determines how much the market expects the prices of options contracts will move in the future.
Greeks live’s data showed that the IV for the futures options on January 12 – which is closely tied to the prospective launch date for the ETF – decreased instead of rising.
Moreover, the trading volume for Bitcoin seems to be significantly low, making up only 2% of the day’s total turnover.
The experts asserted that it seems like the market has already considered the possibility of approval by the SEC for the products.
Bitcoin spot ETF issuer hopefuls are also expecting the occurrence and have modified their applications accordingly.
These factors have resulted in the actual event probably having less of an impact on BTC’s price and volatility.
On the other hand, prominent crypto traders like Scott “Wolf of all Streets” Melkor predict that Bitcoin could target as high as $54,000 in the days following the potential SEC approval.
He pointed out that Bitcoin was forming a “bull pennant” after months of price consolidations around the $40,000 level.
Whereas, VanEck advisor Gabor Gurbachs expects the spot Bitcoin ETFs to be considered a “let down” by the wider market in its early days.
However, he believes the instruments could attract “trillions of dollars” worth of inflows over the next few years.
Bitcoin Spot ETF Applicants Ammend Their Proposals In Anticipation of the Imminent Launch
On December 29, asset managers BlackRock, Valkyrie, Van Eck, Invesco Galaxy, Bitwise, WisdomTree, and Fidelity submitted amended S-1 forms to the SEC, mentioning that the ETFs will use a cash-only share creation and redemption model as requested earlier.
The firms also named JPMorgan, Jane Street, Cator Fitzgerald, and Virtu Securities as “authorized participants” for their proposed spot Bitcoin ETFs.
The APs will be in charge of creating and redeeming shares of the fund and also purchasing BTC on behalf of the asset managers.
At the time of writing, Bitcoin (BTC) is trading at $45,206 – up 7.8% in the last 24 hours.
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