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- Recent events surrounding fake ETF news have highlighted the significant market impact when the SEC makes a final decision on spot ETF applications.
- Analysts remain divided on the potential market reactions to the spot Bitcoin ETF approval.
The approval of the spot Bitcoin ETF remains the much-awaited decision by the crypto community, especially after the early week fiasco regarding the BlackRock iShares spot Bitcoin ETF. Bitcoin enthusiasts have been eagerly waiting for this approval as it could lead to inflows of billions of dollars of institutional money.
However, crypto market analysts remain divided as to what shall happen when the SEC finally gives a green flag for the first spot Bitcoin ETF. The recent price volatility triggered by the fake ETF news serves as a timely reminder of the potential market impact when a final decision is reached regarding spot ETF applications, according to analysts at K33 Research.
In their report, they highlighted that Bitcoin surged 7 percent from just under $28,000 to $30,000 in eight minutes following the false alarm. They also pointed out that Bitcoin experienced a 14 percent gain in the week after BlackRock’s application for a spot ETF in mid-June. K33 Research expects that an actual approval could have a more significant effect than these prior market reactions, and conversely, a rejection might lead to a market decline.
Alex Krüger, co-founder of Asgard Markets, emphasized that the recent market reaction demonstrates that even though approval is widely anticipated, it is not yet fully factored into the price. He suggested that anyone assuming the ETF is already priced in has been proven wrong and predicted a potential +20 percent price surge on the day of approval.
Other analysts are also expecting the Bitcoin price to hit a new all-time high soon as the SEC approves the spot ETF.
Will Bitcoin ETF Approval Be A Sell the News?
Market participants have exhibited an intense focus on the spot bitcoin ETF, underscoring its significance as a positive catalyst for BTC over the next five years, according to digital asset brokerage firm Enigma Securities. Joe Edwards, the head of research at Enigma, emphasized the vital role the spot ETF plays and how Monday’s price action illustrated the significant demand ready to enter the market upon its approval.
Edwards also pointed out the possibility of a “sell the news” event in which BTC’s price initially surges upon the ETF’s approval but subsequently experiences a decline. The spot ETF’s significance in the market remains a pivotal factor that cannot be underestimated, shaping the cryptocurrency’s future dynamics over the next half-decade.
On the other hand, Bitcoin remains a high-risk asset, and given the likelihood of rising interest rates causing a market downturn, they do not anticipate approval will trigger a surge of capital inflows into spot ETFs.
