Bitcoin Holds Above $46,500 as ETF Race Heats Up
Bitcoin remained steady on Tuesday morning, hovering above $46,500 after briefly touching $47,000. The cryptocurrency has seen a 5% increase in the past 24 hours. While most market analysts predict that the U.S. Securities and Exchange Commission (SEC) will approve a spot bitcoin exchange-traded fund (ETF), there are some who believe otherwise. Youwei Yang, the chief economist at BIT Mining, expressed skepticism, stating that he does not expect any spot bitcoin ETFs to be approved in the near future. Yang anticipates that the SEC will delay approvals for at least another three months. He cited concerns about manipulative behaviors in the crypto market and allegations of criminal or terror activities associated with cryptocurrencies as potential reasons for the delay.
On the other hand, some analysts argue that the news of a potential ETF approval has already been factored into the market. Matteo Bottacini, a trader at Crypto Finance, believes that most market participants have already positioned themselves accordingly, limiting the potential for further upside.
BlackRock (BLK) and VanEck, two of the 13 firms vying to launch bitcoin ETFs in the U.S., filed updated documents on Tuesday. These filings indicate that the SEC has provided comments to these prospective issuers within the past 24 hours. CoinDesk previously reported that the SEC had sent comments to several issuers shortly after they filed documents detailing fees for their proposed products on Monday.
The updated filings on Tuesday include changes aimed at protecting shareholders in the event of insolvency and avoiding conflicts of interest between the ETF’s authorized participants. The aim is to ensure that any potential damage is mitigated and that the interests of shareholders are safeguarded.
Meanwhile, the discount on the Grayscale Bitcoin Trust (GBTC), the largest bitcoin fund globally, has reached its narrowest level since April 2021. This comes ahead of an anticipated conversion to a spot bitcoin ETF. Data reveals that the discount dropped to as low as 5.6% on Monday, marking a level last seen in June 2021. The GBTC has been trading at a discount since February 2021, with the discount peaking at nearly 50% in December 2022. However, the expectation of an ETF approval and growing optimism surrounding bitcoin have gradually closed the gap.
Each GBTC share closed at $39 on Monday, while the value of bitcoin held by each share stood at $41.86 as of Tuesday. The GBTC does not have an inherent market mechanism to ensure that the share price aligns closely with the underlying value of bitcoin, which allows traders to utilize discounts and premiums as part of their trading strategies.
Chart of the Day:
The chart shows the number of mentions of “bitcoin ETF” on social media (bars) and the price of bitcoin since November. The market has been primarily focused on the optimism surrounding ETFs, setting the stage for a potential price drop once the SEC approves spot exchange-traded funds. It is expected that the SEC will approve one or more spot ETFs by January 10th.
Source: Santiment – Omkar Godbole
Edited by Sheldon Reback.