Despite the increasing odds of a spot Bitcoin ETF approval, traders remain somewhat apprehensive, with concerns that the event may already be factored into the pricing.
Bitcoin has recently broken above the $40,000 mark for the first time since April 2022. This surge occurred less than two weeks ago, on Dec. 4 and was followed by a rally toward $44,000. However, this resistance level has proven to be a formidable barrier. There are now questions regarding whether a correction down to $41,000 is the most likely scenario.
BTCUSD Daily Chart
Market Movements Amid ETF Approval Chances
The past 16 days have been marked by several rejections at $44,000 and subsequent retests of the $41,000 support. Interestingly, these fluctuations have occurred in conjunction with an increase in the likelihood of a spot Bitcoin ETF approval by January, as reported by Bloomberg ETF analysts. This comes after multiple issuers amended their filings to comply with the cash redemption model demanded by securities regulators.
Firms such as BlackRock have updated their S-1 registration statements to exclude non-monetary payments, known as ‘in-kind’. Essentially, the creation and redemption of ETF shares will happen in cash, rather than allowing participants to pay or be compensated in Bitcoin, although the fund itself will retain the ability to hold the actual cryptocurrency.
Traders’ Speculations Regarding ETF Impact on Bitcoin Price
Some traders put forth the idea that the spot ETF listing adheres to the ‘buy the rumor, sell the news’ pattern. This suggests that savvy investors anticipate the launch, causing most gains to occur before the actual regulatory approval.
There’s also speculation about the balanced demand between BTC put and call options due to regulatory uncertainty. The Bitcoin options market tells a slightly different story, as call (buy) and put (sell) options have been trading at similar price levels for the past week. Despite Bitcoin’s price rallying 15.4% in December, there’s not been an increased demand for downside protection.
Regulatory Risks and Investor Confidence
Despite the excitement surrounding the potential approval of a spot Bitcoin ETF, regulatory risk remains high, especially for cryptocurrency exchanges. On Dec. 15, the U.S. Securities and Exchange Commission (SEC) denied Coinbase’s petition for rulemaking on cryptocurrency. This decision strengthened the $44,000 resistance level and limited investors’ appetite.
However, looking at the bigger picture, Bitcoin’s 164% year-to-date gains significantly outshine the stock market’s 23.2% increase, as measured by the S&P 500 index. This discrepancy has prompted some profit-taking movements in the cryptocurrency. Nonetheless, Bitcoin whales seem unfazed by the latest rejection, as indicated by BTC derivatives metrics, leaving room for further gains before the actual spot ETF approval.
Spectrum of Bitcoin Price Predictions Amid ETF Decision
In the wake of the upcoming Bitcoin ETF decision, the crypto world is abuzz with a variety of price predictions. Some analysts envision a moderate climb, with the price of Bitcoin expected to fluctuate between $42,000 and $100,000 post-ETF approval. Yet, there are those in the financial sector who voice a far more bullish view, anticipating a potential surge to a high of $160,000 or even an astounding $1,000,000. Such optimism largely stems from the potential influx of institutional investment and supply dynamics that could be ignited by the approval of an ETF.
Blockstream CEO’s Bullish Forecast
Adam Back, the CEO of Blockstream, is among the optimists predicting a significant rise in Bitcoin’s value, projecting it could hit the $100,000 mark. Back suggests this surge could occur even prior to the introduction of an ETF and the forthcoming Bitcoin halving event. He emphasizes the profound impact an ETF could have on Bitcoin’s value, highlighting its potential to drastically reshape the market dynamics of the cryptocurrency.
CryptoQuant’s Prediction for Bitcoin
Echoing this optimism, on-chain analysis firm CryptoQuant has divulged to BeInCrypto their prediction that Bitcoin will surpass the $160,000 mark. Their forecast hinges on several pivotal factors, including the expected surge in Bitcoin demand following the approval of multiple ETFs, the impending Bitcoin halving event, and a potential rally in the broader stock markets prompted by interest rate cuts.
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