Will the approval of Bitcoin spot ETF and how will it affect the market? This article explores the positive and negative impact of this decision on the price of Bitcoin, allowing readers to judge whether bullish forces or bearish forces have the advantage. This article is sourced from Reed Macdonald.
Article:
Title: The Impact of Bitcoin Spot ETF Approval: Positive or Negative?
Last night, Matrixport’s report stated that due to all applications failing to meet key requirements, it is expected that the SEC will reject all proposals in January. As soon as this news came out, liquidations on the entire network increased by 451 million USD within an hour.
Why can the SEC’s final decision on Bitcoin spot ETF cause a huge reaction in the crypto market? Cryptocurrency researcher Reed Macdonald reviewed the history of Bitcoin’s relationship with ETFs in the past few years, pointing out the uncertainty of Bitcoin’s future trend after the SEC’s ruling, and emphasized the importance of considering broader market dynamics. The following is the translation by BlockBeats:
In 2023, Bitcoin saw an increase of over 150%, which attracted great attention on Wall Street and led to companies rushing to launch the first Bitcoin ETF in history.
Currently, all attention is focused on the decision of the US Securities and Exchange Commission (SEC) regarding the approval of the Bitcoin spot ETF, which is planned to be listed on January 10.
If past situations can provide some reference, this decision will have a significant impact on the price of Bitcoin, although it is still uncertain whether it will be positive or negative.
Supporters of Bitcoin ETF believe that if approved by the SEC, it will bring a lot of opportunities for institutional and retail investments, driving the price of Bitcoin to new highs.
History provides us with an insight into how ETFs are expected to affect the price of Bitcoin.
In 2017, the price of Bitcoin once soared to over $1,400, partly due to expectations of the first Bitcoin ETF. This was an increase compared to the previous year’s low of around $600.
At that time, investors believed that the introduction of Bitcoin ETF would make it easier for institutional funds to enter the market, triggering a buying frenzy. However, the SEC ultimately rejected the proposal, causing the price of Bitcoin to plummet.
Within a few days, the price of Bitcoin fell back to below $1,000. However, ultimately, the launch of Bitcoin futures in 2017 brought new attention to the market, and the price surged to over $20,000 that year.
From the announcement to the listing of Bitcoin futures on CME, the price rose.
For example, let’s fast forward to 2021, when Bitcoin once again reached a new all-time high of over $60,000.
This time, the rise was partly driven by the successful launch of Bitcoin futures ETFs in Canada and Europe. These ETFs allow investors to gain exposure to Bitcoin without directly holding the cryptocurrency. The expectation of launching similar products in the United States fueled bullish sentiment.
Finally, earlier this year, false news of ETF approval caused the price of Bitcoin to rise thousands of dollars within minutes, indicating that once approved, it could bring volatile price fluctuations.
False news of ETF approval led to a surge in the price of Bitcoin.
On the other hand, some believe that the approval of Bitcoin ETF may trigger price adjustments.
Some market experts are concerned that ETFs may become targets for short sellers, leading to increased volatility, or ETFs may become “sell signal events.”
In addition, the approval of Bitcoin ETF may subject the entire cryptocurrency market to stricter regulatory scrutiny. This enhanced regulation may lead to increased taxation, higher reporting requirements, and potential restrictions on Bitcoin usage, which could dampen investor enthusiasm.
Furthermore, some believe that the market may have already priced in the possibility of Bitcoin ETF approval, and any decision to reject it may result in disappointment and a sell-off similar to when the Winklevoss Bitcoin ETF was rejected in 2017.
After the rejection of the ETF in 2017, the price of Bitcoin was sold off.
The Bitcoin community eagerly awaits the SEC’s final decision, but it is important to remember that this is just one of the many factors that can affect the price of Bitcoin.
Market sentiment, macroeconomic conditions, and geopolitical events will also play a role in shaping Bitcoin’s future.
Overall, the price of Bitcoin is at a crossroads, and investors are waiting for the SEC’s decision on the Bitcoin ETF.
Although past situations indicate that ETF expectations may have a significant impact on the price of Bitcoin, it is crucial to consider broader market dynamics. Whether the price of Bitcoin will rise or fall after the SEC’s ruling will depend on many factors, including how the market interprets and reacts to the decision.
As the crypto world holds its breath, the future of Bitcoin remains uncertain, but there is no doubt that this is a crucial moment for the world’s only decentralized cryptocurrency.
Further reading:
K33 Analyst: Bitcoin spot ETF approval will result in “over 70% decline,” with a 5% chance of being rejected by the SEC.
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