The approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) is expected to have a positive impact on the price of Bitcoin. However, some analysts are concerned that it may not be enough to fully revive the market.
On October 24, Bitcoin experienced its largest single-day rally in over a year, rising more than 14% on the news that the ticker of BlackRock’s spot Bitcoin ETF, IBTC, had been listed on the Depository Trust & Clearing Corporation (DTCC) website. This development was seen as a significant step forward for the application of the fund. The surge in price was even stronger than the one on October 16, when Cointelegraph mistakenly tweeted that a spot Bitcoin ETF had been approved.
Pseudonymous trader TheFlowHorse, who has a large following on X, believes that these market movements provide a hint of Bitcoin’s price action if a spot Bitcoin ETF is approved. According to TheFlowHorse, investors can expect to see a similar or even greater surge in price if the ETF is approved.
However, TheFlowHorse also points out that while approval could drive prices significantly upward, there is likely to be a retracement in the mid-term. This is because the market will be crowded with eager investors chasing the news. The inefficient moves caused by this overcrowding tend to be filled and retraced to some degree.
Analysts have differing views on the long-term effects of a spot Bitcoin ETF approval. Tony Sycamore, an analyst at IG International, expects Bitcoin to continue surging to new yearly highs on the day of the announcement. Rachel Lucas, a technical analyst at Australian crypto exchange BTC Markets, believes that the approval of BlackRock’s ETF will act as a catalyst for the rest of the traditional finance sector.
However, Tina Teng, an analyst at CMC Markets, suggests adopting a more cautious stance. She argues that Bitcoin still lacks the fundamentals to support a quantitative valuation like shares and does not have the scope of utilization like commodities. Therefore, even with SEC approval, Bitcoin remains a speculative asset. Teng concludes that macro changes will have a major impact on the crypto markets, particularly during a Fed rate cut cycle.
The approval and timing of a spot Bitcoin ETF are still uncertain. While some ETF analysts speculate that SEC Chair Gary Gensler may delay approval until the last minute, others believe that approval could arrive within the next few months. Bloomberg ETF analysts James Seyffart and Eric Balchunas estimate the chances of approval by January 10 next year at 90%.
In conclusion, the approval of a spot Bitcoin ETF is expected to drive up the price of Bitcoin, but there are concerns about overcrowding and potential retracements in the market. The long-term effects of the approval remain uncertain, and market analysts have differing views on the matter. The timing of the approval is also unclear, with some speculating a potential delay.