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The expectation of approval for Bitcoin (<a href="https://en.coin-turk.com/crypto-analyst-tone-vays-indicates-critical-27k-level-for-bitcoins-bullish-trend/”>BTC) exchange-traded funds (ETFs) in the near future and the potential impact on BTC price has been a prominent narrative in the cryptocurrency market. However, some analysts express concerns that ETF approval may not be sufficient on its own to fully revive market sentiment.
What the Recent Events Might Indicate for Post-Approval Scenarios
On October 24th, the price of Bitcoin saw a significant increase of over 14% – the largest daily surge in over a year. This rise was prompted by the listing of the spot Bitcoin ETF, abbreviated as IBTC and managed by asset management giant BlackRock, on the Depository Trust & Clearing Corporation (DTCC) website. This development was seen as a positive step in the approval process for the ETF. Furthermore, false news of BlackRock’s application being approved led to an even stronger price increase on October 24th.
According to an anonymous analyst known as The Flow Horse, who has a large following on X (formerly known as Twitter), these two market events provided clues about how the price of BTC might react to the approval of spot Bitcoin ETFs. The Flow Horse stated that if ETFs are approved, investors can expect a “similar-sized” movement, although not necessarily larger. The analyst also warned that while ETF approval may significantly increase prices, it could also lead to a temporary pullback due to the influx of eager investors seeking to capitalize on the news.
Expert Opinions on the Impact of Spot Bitcoin ETF Approval
In a report published earlier this month, JPMorgan analysts led by Nikolaos Panigirtzoglou wrote, “The timing of the approval of a Spot Bitcoin ETF remains uncertain, but it needs to come within months and most likely before the final deadline of January 10, 2024 for the applications by Ark Invest and 21Shares.” The report also stated, “These are the closest final decision dates for the spot Bitcoin ETFs in front of the SEC.”
However, there is a general consensus among Bloomberg ETF analysts such as James Seyffart and Eric Balchunas that approval is likely to come in early next year.
Despite the overall positive outlook, investors need to remain cautious. The increase in demand for Bitcoin may be temporary due to high interest rates and unfavorable macroeconomic factors in the US and Europe. In the current economic environment, a full-fledged bull market and sustained price increase for Bitcoin appear less likely as high interest rates can affect the attractiveness of risky assets and potentially reduce the impact of approved spot ETFs on investors’ decisions.
Furthermore, the approval of spot Bitcoin ETFs is an anticipated event, and it is highly likely that the market is already pricing in this development. Indeed, it is worth noting that since the beginning of the year, Bitcoin’s price has increased by a significant percentage of 108%, with the expectation of spot ETFs and the halving of block rewards being the main drivers of this growth. After approval, a “buy the rumor, sell the news” scenario may unfold in the short term, resulting in a price decrease instead of an increase.
When looking at Bitcoin and the overall cryptocurrency market from a broader perspective, it can be observed that the performance of cryptocurrencies moves in the opposite direction of macroeconomic factors, especially interest rate hikes. All these factors significantly influence the direction in which the cryptocurrency market moves and will move. Therefore, while an increase in Bitcoin’s price is expected, its sustainability and long-term nature depend not only on market sentiment but also on macroeconomic factors.
