A quick 10% increase in Bitcoin provided traders with a preview of the potential effects of the US Securities and Exchange Commission’s impending decision on whether to permit exchange-traded funds that make direct token investments.
The largest digital asset quickly reached $30,02 on Monday, its highest price since March, after it was falsely reported that BlackRock Inc. had received approval to introduce a spot ETF. The move slowed down after the biggest money manager in the world stated that their application is still being considered, leaving Bitcoin 4.4% higher for October 16.
In anticipation that the SEC may soon drop its resistance to the products, BlackRock is one of approximately a dozen companies looking to launch the first Bitcoin ETFs listed on the US market. Optimists claim that such funds will encourage greater adoption of cryptocurrencies.
According to James Seyffart, an analyst for Bloomberg Intelligence ETF, “this was sort of a dry run for what’s going to happen if these things actually do get approved.” It essentially served as a guidebook for traders.
Seyffart stated on Bloomberg Television that he anticipates a group of spot Bitcoin ETFs to be approved before a deadline in January.
If only momentarily, the swings in the price of Bitcoin broke up a period of low volatility, which indicates a lack of enthusiasm from buyers. Following last year’s crash and collapses like that of the FTX exchange, whose co-founder Sam Bankman-Fried is on trial for a multibillion-dollar scam, many investors have abandoned virtual coins.
Short Squeeze
In the previous day, traders who were betting on lower prices liquidated positions in Bitcoin worth $95 million, according to Coinglass statistics.
Noelle Acheson, editor of the Crypto Is Macro Now newsletter, predicted that once we start to see efforts to start pricing this in after some success on the ETF front, She also expects some users of the token to use it as a safety net against geopolitical and economic risks.
Developments regarding spot ETFs have sparked some of Bitcoin’s biggest rallies in 2023. After industry titans like BlackRock and Fidelity Investments requested clearance from the SEC to launch the funds, the value of the digital asset surpassed $30,000 in June. After then, the token dropped to roughly $26,000.
Another surge occurred toward the end of August when a US court decision may have made it possible for the $17.7 billion Grayscale Bitcoin Trust to become an ETF.
SEC’s Role
Since the SEC has been cracking down on the cryptocurrency industry this year, it has so far opposed Bitcoin ETFs because of concerns like fraud and market manipulation. ETFs carrying ether and bitcoin futures have been allowed.
After Monday’s Bitcoin price swings, the regulator urged people to “be careful what you read on the internet” in a message on X, the website that replaced Twitter. The agency further stated that “the SEC is the best source of information about the SEC.”
The possibility and timing of approvals for spot ETFs are still up for dispute. The second-largest token, Ether, had its first ETF launch in the US in October, but they were not well received, casting doubt on predictions that the usage of cryptocurrencies would increase.
According to Tony Sycamore, a market analyst at IG Australia Pty, Bitcoin might increase to roughly $32,000 if a spot Bitcoin ETF is approved, but “the question is how far away that is from coming and then what happens at range highs—at the very least, I wouldn’t expect it to break range highs on the first test,” he said.
As of 6:42 a.m. on Tuesday in London, Bitcoin fell by about 1% to $28,180, and lesser coins like Ether and Dogecoin also experienced slight movements. Although bitcoin has increased by 70% so far this year, it is still far behind its peak of about $69,000 in 2021.
