With the January 10 deadline looming for the U.S. Securities and Exchange Commission (SEC) to make a crucial decision regarding the potential approval of a Bitcoin spot exchange-traded fund (ETF), expectations and speculation are on the rise.
According to reports, the SEC “may” notify issuers as early as Tuesday or Wednesday, signaling clearance to launch spot bitcoin ETFs in the following week.
Crypto analyst, , outlines a “Bitcoin ETF base case scenario,” predicting potential developments around January 8-10. In the event of a positive outcome with the approval of a Bitcoin spot ETF, anticipates an immediate upside move in Bitcoin’s price. He notes that this positive scenario is currently around 90% priced in.
Following approval, Kruger speculates that Bitcoin’s price may experience a drop below the pre-approval levels of Ethereum (ETH) in the lead-up to the launch, which remains uncertain in terms of an official date. Kruger suggests that a sooner launch makes more sense given the competitive landscape among ETFs.
In the aftermath of a Bitcoin spot ETF launch, Kruger forecasts strong inflows or volume to reestablish an upward trend. However, he also warns that if inflows are weak, prices might fall as early investors sell into a limited number of bids.
In the event of a bearish outcome with the SEC rejecting the Bitcoin spot ETF, Kruger predicts a rapid collapse in prices. Regardless of the outcome, traders are advised to remain vigilant in January.
As 2023 comes to a close, Bitcoin is poised to be one of the top-performing assets, boasting a gain of over 160%, outperforming major traditional assets even in risk-adjusted terms, fueled in part by the ETF hype.
Optimism surrounding a spot BTC ETF escalated after BlackRock filed, propelling BTC from $28K to nearly $45K. Kaiko reports that despite a relatively uneventful middle of the year, Bitcoin has one of the strongest Sharpe Ratios among major assets, second only to Nvidia, whose shares surged on AI hype from January to May.
At the time of writing, BTC saw a 1.2% increase in the last 24 hours, reaching $42,620. The cryptocurrency market remains on edge as the community awaits the SEC’s decision and its potential implications for the market.
