- Bitwise has filed an S-1 Form with the SEC, intending to seed its Spot Bitcoin ETF with a substantial $200 million, surpassing BlackRock’s $10 million seed.
- Analysts caution against expecting significant short-term movements in the cryptocurrency market upon the approval of the first spot Bitcoin ETF in the US.
The entire crypto community has been waiting at the edge of their seats for the purported launch of the spot Bitcoin ETF likely to happen this week.
Bitwise, a prominent global crypto index fund manager, has submitted the required S-1 Form to the US Securities and Exchange Commission (SEC), disclosing its intention to seed the Spot Bitcoin ETF with a substantial $200 million. This filing surpasses BlackRock’s $10 million seed for its Spot BTC ETF, signaling a significant financial commitment.
Bloomberg’s Senior ETF Analyst, Eric Balchunas, highlighted the substantial seed amount, emphasizing its potential impact on Bitwise’s early market positioning. The identity of the Authorized Participant (AP) remains undisclosed, but further information is anticipated in the near future.
Bitwise S-1 has been filed and it looks like someone (I wonder who) is going to seed $BITB with $200m, which blows away BlackRock’s $10m (that we know of). That’s gonna be huge help in early days of race. No AP named but prob forthcoming. pic.twitter.com/hQ7uW9Occo
— Eric Balchunas (@EricBalchunas) December 29, 2023
As the deadline for the approval or disapproval of Bitcoin Spot ETF filings approaches, all eyes are on the US SEC’s decision, which is expected to influence the trajectory of Bitcoin and cryptocurrency prices throughout 2024. The imminent regulatory decision holds particular significance in the lead-up to the scheduled BTC halving event in April 2024.
Don’t Expect Magic With Bitcoin ETF Approval
The approval of the first spot Bitcoin ETF in the US will certainly be a milestone event for the crypto market. However, analysts are warning investors not to expect any major moves in the short term.
VanEck Strategy Advisor Gabor Gurbacs shared his perspective, stating that there might be an overestimation of the initial impact of U.S. Bitcoin ETFs, foreseeing perhaps a few hundred million dollars in flows, mostly comprised of recycled money. Gurbacs emphasized that, in the long term, the impact of spot Bitcoin ETFs could be underestimated, drawing parallels with the historical significance of gold as a guide.
Bloomberg ETF analyst James Seyyfart echoes Gabor’s viewpoint, expressing general agreement. He notes that there seems to be a consensus, albeit anecdotal, that people are anticipating a substantial short-term impact, which Seyyfart believes could be somewhat underwhelming. Simultaneously, he suggests that the potential longer-term impacts may not be fully appreciated.
Seyyfart sets the over-under on U.S. net flows at approximately $10 billion one year after launch. He highlights the uncertainty surrounding the future of GBTC flows as a significant question mark in his assessment. Last week, Ark Invest sold all of its holdings in GBTC shares to buy the ProShares bitcoin futures Strategy ETF.
Mostly in agreement with Gabor on this. Consensus seems to be (anecdotally) that People are focused on a massive short term impact that I think could be a bit of a let down while at same time not fully appreciating the potential longer term impacts. https://t.co/z69Wbffcu9
— James Seyffart (@JSeyff) December 31, 2023
BTC Price Action in January
Analysts are pointing out caution for BTC price action ahead this month in January. Although the news of Bitcoin ETF approval could serve as a catalyst, the upside remains limited.
Moreover, indications from options data imply that the market has already factored in the anticipated Bitcoin ETF news, and any significant rally may not be on the horizon.
According to the latest market update, data from Greeks.Live reveals minimal volatility in major term implied volatilities (IVs) and prices, despite speculation about the SEC approving the Bitcoin Spot ETF application next Tuesday.
A closer look at the options data highlights a decrease in implied volatility for Jan12 options, which is closely tied to the ETF. Moreover, the trading volume for these options is notably low, representing only 2% of the day’s overall turnover—a level of activity rarely observed.
There is news in the market that the SEC will pass the Bitcoin Spot ETF application as early as next Tuesday, but there was little volatility across the major term IVs and the price.
Looking at the options data, Jan12 options IV, which is strongly correlated to the ETF, fell… pic.twitter.com/f1B4ZPC05d— Greeks.live (@GreeksLive) December 31, 2023
In a recent market update, Rekt Capital notes Bitcoin’s historical tendency to undergo volatile retests when approaching the $41,000 support level (depicted in blue). These retests often result in downside wicks reaching around the $37,000 region, indicating a recurrent pattern in the price behavior.
Drawing from historical data, Rekt Capital suggests that a potential dip to the $37,000 level could be viewed as a healthy retracement. The analyst highlights Bitcoin’s prior instances of similar price movements, noting their contribution to the overall market robustness of the cryptocurrency.
New Monthly Close is in
The last two times Bitcoin retested ~$41000 (blue) as support, price produced volatile retests
The retests saw downside wicks go to as low as the ~$37000 region
History suggests any dip into ~$37000 would be healthy$BTC #Crypto #Bitcoin pic.twitter.com/AVBF7WYAYL
— Rekt Capital (@rektcapital) January 1, 2024
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