• Spot Bitcoin ETFs to start trading following historic approval from SEC.
• Volatility might rock the Bitcoin market as investor actions may not match general expectations.

As the financial market eagerly awaits the opening bell for spot Bitcoin Exchange-Traded Fund (ETF) trading today, investors are left wondering what to expect and if Bitcoin’s price will rise to $50,000 or fall to $40,000.

After a decade of relentless efforts and regulatory hurdles, spot Bitcoin ETFs have finally received approval in the United States. The Securities and Exchange Commission’s green light on January 10 paved the way for the highly anticipated products to debut on U.S. markets run by the NYSE, Cboe Global Markets, and Nasdaq.

The Significance of Spot Bitcoin ETFs

Unlike the Bitcoin futures ETFs approved in 2021, which invest in derivatives, spot Bitcoin ETFs allow investors to gain exposure directly to the digital asset itself. Cynthia Lo Bessette, Head of Digital Asset Management at Fidelity Investments, one of the Bitcoin ETF issuers, emphasized that these products offer investors interested in digital assets more choices. Bessette stated,

“We’ve long believed a spot-priced exchange-traded product would be an efficient way for investors to gain exposure to bitcoin.”

The approval of spot Bitcoin ETFs means that virtually any retail customer can now gain exposure to Bitcoin’s price through their conventional brokerage apps and accounts. Traditional financial institutions can also invest without the need to navigate the complexities of crypto exchanges. This broadened accessibility is expected to attract a wider range of investors, further legitimizing Bitcoin as an investment option.

With 11 spot Bitcoin ETFs poised for launch, some of which have already attracted billions of dollars in assets, liquidity providers and market makers have been diligently preparing for the trading debut. 

This meticulous preparation ensures that the Bitcoin market remains efficient amid the surge in interest. The interaction between Bitcoin’s spot market, futures markets, and the already existing Bitcoin futures ETFs is expected to contribute to the liquidity of the spot ETFs on the first day of trading.

Speculations on Bitcoin’s Price Dynamics

Bitcoin has experienced a remarkable run in the last three months, surging by 71% to reach $46,045.35. At the time of writing, it is trading at $46,260, showing a 1% increase in the past 24 hours. The market cap is pegged at $906.7 billion, with a 24-hour trading volume of $52.3 billion.

As the market opens to these new investment products, investors should be prepared for potential price volatility. The increased demand for Bitcoin through the ETF could drive up prices, with some analysts predicting a push toward the $50,000 mark. Positive sentiment surrounding the ETF launch and growing interest from institutional investors could create a bullish trend in the short to medium term.

Conversely, skeptics point to the historical volatility of the crypto market and argue that the launch of the ETF may trigger profit-taking among existing Bitcoin holders. Concerns about regulatory uncertainties, market manipulation, and the potential for a broader market correction could contribute to a price pullback. 

Additionally, a bearish sentiment could prevail if the market interprets the ETF launch as overhyped, leading to disappointment among investors who expected an immediate and substantial price increase.