Bitcoin Rally Cools in Countdown to US Spot ETF Decision by SEC ...
(Bloomberg) -- Bitcoin consolidated after a surge past $47,000 on bets that the US is poised to approve the launch of the nation’s first exchange-traded funds investing directly in the world’s largest digital asset.
The token dipped to $46,770 as of 8:56 a.m. in Singapore on Tuesday after a 6.5% jump on Monday in the US. Its new year climb now stands at 10%, contrasting with drops over the same period in stocks and gold. The crypto market expects a green light for US spot Bitcoin ETFs by a Jan. 10 deadline.
Prospective issuers such as BlackRock Inc., Fidelity Investments and Ark Investment Management updated paperwork with the Securities and Exchange Commission, and the regulator has until Wednesday to take action on at least one of the applications. Speculators are wagering that the agency will announce a slew of decisions at once to avoid handing out a first-mover advantage.
Read more: Bitcoin ETF Hopefuls Eye This Week for Elusive SEC Approval
If the funds are approved, the next question is how much money they will woo. Bitcoin is up 172% in the past 12 months in an indication that traders anticipate greater adoption of the digital token by mainstream investors via the ETFs.
“Participants seem to be coming around to thinking that the initial flows will actually exceed expectations,” said Kyle Doane, a trader at Arca.
Applicants amended forms on Monday in the US in a final push to offer spot Bitcoin ETF products more than a decade after the first attempt.
SEC Chair Gary Gensler has repeatedly argued that crypto is rife with fraud and misconduct. The agency cracked down on the sector following a 2022 market rout and collapses such as the bankruptcy of Sam Bankman-Fried’s FTX exchange.
But the SEC last year lost a key legal fight against crypto asset manager Grayscale Investments LLC, spurring speculation that the regulator will have to acquiesce to the spot ETFs.
ETF Critics
Critics contend that the products pose a risk for investors given that digital assets are notorious for volatility and attracting illicit activity.
“What’s going to happen, unfortunately, is lots and lots of Americans in our view, are going to get hurt financially,” said Dennis Kelleher, chief executive officer of financial reform nonprofit Better Markets.
The advance in Bitcoin has lifted the digital-asset market more broadly, bolstering smaller tokens like Solana and Cardano. US crypto-linked stocks mostly rose on Monday, setting up a tailwind for Asian peers such as Japan’s Monex Group and Woori Technology Investment Co. in South Korea.
Pullback Risk
Some crypto watchers wonder whether Bitcoin is ripe for a pullback if and when SEC approval finally lands, since speculators may decide to bank a slice of profits from the token’s rally.
There are “no signs” of a so-called sell-the-news event just yet, Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note. Based on chart patterns, the $51,000 level is a possible target before any such pullback, according to Tony Sycamore, a market analyst at IG Australia Pty.
Looking past short-term price gyrations, “the main result of Bitcoin spot ETF approval will be the marketing machine behind greater Bitcoin awareness, powered by some of the largest names in traditional finance,” wrote Noelle Acheson, author of the Crypto Is Macro Now newsletter.
--With assistance from Sunil Jagtiani.
©2024 Bloomberg L.P.
