Why Bitcoin Price Rises or Falls Depending on ETF Ruling
Bitcoin is up more than 150% in 2023, and its momentum has captured the hearts and minds of Wall Street, resulting in the landmark launch of the first Bitcoin exchange-traded fund (ETF) by companies.
All eyes are now on the U.S. Securities and Exchange Commission’s (SEC) decision on approving a spot Bitcoin ETF, scheduled for January 10th.
If past evidence is any indication, this ruling will have a significant impact on the price of Bitcoin, but whether it will be positive or negative remains to be seen.
price rise potential
Bitcoin ETF proponents argue that SEC’s approval will open a flood of institutional and retail investments, pushing the price of Bitcoin to new heights.
History provides a glimpse into how expectations surrounding ETFs have influenced the price of Bitcoin.
In 2017, the price of Bitcoin surged above $1,400 on anticipation of the first Bitcoin ETF. This is up from the low end of the $600 range the previous year.
At the time, investors believed that the introduction of Bitcoin ETFs would make it easier for institutional funds to enter the market, leading to a buying frenzy. However, the SEC ultimately rejected this proposal, which caused the price of Bitcoin to plummet.
Within a few days, the price was trading below $1,000 again.
But ultimately, the emergence of Bitcoin futures sparked renewed interest in 2017, sending the market soaring by more than $20,000 that year.
Elsewhere, we can fast-forward to 2021, when Bitcoin once again rose to all-time highs, surpassing $60,000.
The rally was triggered in part by the successful launch of Bitcoin futures ETFs in Canada and Europe. These ETFs allowed investors to gain exposure to Bitcoin without holding the cryptocurrency directly. Expectations that similar products would be launched in the United States helped create an optimistic mood.
Finally, earlier this year, fake news about an ETF approval caused the price of Bitcoin to rise by thousands of dollars in a matter of minutes, a move likely signaling upward volatility upon approval.
price drop possible
On the other hand, there are also claims that the approval of Bitcoin ETF could lead to a price adjustment.
Some market experts are concerned that ETFs could become subject to short selling, increasing volatility, or that ETFs could become “news selling events.”
Moreover, the approval of a Bitcoin ETF could further increase regulatory scrutiny on the cryptocurrency market as a whole. This heightened oversight could lead to increased taxation, reporting requirements, and potential restrictions on Bitcoin usage, which could dampen investor enthusiasm.
Additionally, some believe that the market may have already priced in the possibility of Bitcoin ETF approval and that a decision to reject it could result in disappointment and a sell-off similar to what we witnessed when the Winklevoss Bitcoin ETF was rejected in 2017.
While the SEC’s final decision is eagerly awaited by the cryptocurrency community, it is important to remember that this is just one of many factors affecting the price of Bitcoin.
Market sentiment, macroeconomic conditions, and geopolitical events will also play a significant role in shaping the coin’s future.
conclusion
In conclusion, Bitcoin price is at a crossroads as investors await the SEC’s decision on Bitcoin ETFs.
While past examples have shown that ETF expectations can have a significant impact on the price of Bitcoin, it is important to consider broader market dynamics. Whether the price of Bitcoin rises or falls following the SEC ruling will depend on a variety of factors, including how the market interprets and reacts to the decision.
While the future of Bitcoin remains uncertain as the cryptocurrency world holds its breath, there is no denying that it is a pivotal moment for the world’s only decentralized cryptocurrency.
