The SEC is set to approve or deny the first U.S. Bitcoin ETF in January – either way, the market is likely in for a price shift.
Bitcoin has experienced a remarkable surge of over 150% in 2023, captivating Wall Street’s attention and sparking a race among firms to launch the first-ever Bitcoin exchange-traded fund (ETF). The spotlight is now on the U.S. Securities and Exchange Commission (SEC) as it approaches a crucial decision on the approval of a spot Bitcoin ETF scheduled for January 10.
The outcome of the SEC’s decision is anticipated to have a substantial impact on Bitcoin’s price, with potential scenarios for both a positive or negative influence.
Potential for a Price Rise:
Advocates for a Bitcoin ETF argue that SEC approval would create a pathway for a substantial influx of institutional and retail investments, propelling Bitcoin’s price to unprecedented levels. Historical patterns shed light on how expectations surrounding ETFs have influenced Bitcoin’s price.
In 2017, Bitcoin’s price surged above $1,400, driven in part by heightened anticipation of the first Bitcoin ETF. This marked a significant increase from the previous year’s lows in the $600 range. Investors were optimistic that a Bitcoin ETF’s introduction would simplify the entry of institutional funds into the market, triggering a buying frenzy. However, the SEC ultimately rejected the proposal, leading to a sharp decline in Bitcoin’s price.
Within a few days, the price retreated below $1,000. Nonetheless, the introduction of Bitcoin futures later in 2017 attracted renewed attention, propelling the market to surpass $20,000 that year.
Fast forwarding to 2021, Bitcoin witnessed another remarkable rally, soaring to all-time highs exceeding $60,000. This surge was, in part, attributed to the successful introduction of Bitcoin futures ETFs in Canada and Europe. These ETFs provided investors with a means to access Bitcoin’s exposure without directly holding the cryptocurrency. The optimism surrounding the possibility of a similar product being launched in the United States contributed to the overall bullish sentiment.
Furthermore, earlier in the year, the spread of fake news suggesting the approval of a Bitcoin ETF resulted in a rapid surge in Bitcoin’s price by several thousand dollars within minutes. This incident implies that the potential for upside volatility upon ETF approval remains a significant factor in shaping Bitcoin’s market dynamics.
