Is a bitcoin ETF approval priced in? In the short term, probably

If a bitcoin ETF starts trading, there is no telling what it could do to the cryptocurrency’s price, analysts say

article-image

Gideon Ikigai/Shutterstock modified by Blockworks

share

Bitcoin has gained as much as 8.7% this week on optimism that the SEC will rule favorably on a spot bitcoin ETF. The cryptocurrency faltered slightly on Tuesday however, losing around 0.7%. Analysts say it could be a sign that the ETF news is priced in, at least in the short term. 

“Given the lack of stronger moves upward as goalposts were passed over the past few days, and given signs of jitteriness with the sharp drop last week and this morning’s wick lower, it could be that the market is already discounting SEC approval, and is primed for an excuse to sell,” Noelle Acheson, author of the ‘Crypto is Macro Now’ newsletter, said. 

Should spot bitcoin ETFs get the green light, there is a wide range of estimates for initial inflows, Acheson said she’s heard predictions from $2 billion to $5 billion. 

“Surely that is material to the price outcome?” she added. “There’s a lot of uncertainty here.”

Read more: Bitcoin ETF tweets and Vitalik’s car crash: How news real and fake moves crypto prices

Roshun Patel, partner at Hack VC, agreed, adding that it’s nearly impossible to completely price in the potential structural changes and flows that a bitcoin ETF could bring. 

“Short term though, could you see some rotation back from BTC into ETH and the ‘next ETF’ narrative once [a bitcoin ETF] is live? Sure, but over more investable time horizons, the impact it has on flows is hard to know down to the dollar today,” Patel said. “It can really only surprise to the upside. Dollars are infinite after all.”

The SEC owes Ark and 21Shares an answer on their bitcoin ETF application Wednesday. If they – and any of the other eleven issuers in the game – get the green light, analysts say the product could start trading as soon as the next day

Bitcoin’s small dip Tuesday didn’t impact its year-to-date gains much. It’s still up about 10% since the New Year. Ether (ETH) lost around 3% Tuesday, putting it about 0.8% lower year to date. 

The Nasdaq Composite and S&P 500 indexes were fairly flat Tuesday afternoon, erasing losses from earlier in the trading session. 

Monday saw the S&P 500 hit a new 2024 high, helping inch into the green for year-to-date returns. The index is now 0.2% higher since the start of the year. The tech-heavy Nasdaq Composite is fairly flat over the year after losing 2.5% last week. 

Analysts say the key market-movers for equities have not changed much from the factors that drove stocks higher at the end of 2023. 

“Unlike the past several years, there aren’t a lot of influences on stocks and bonds right now, as there are really just three macro influences driving markets: Fed policy expectations, economic growth…and inflation,” Tom Essaye, founder of Sevens Report Research, said. 

Traders are still betting on a soft landing and the rate cut cycle starting in March. It’s an ambitious bet, Essaye said. 

“Bottom line, how the facts begin to play out in the new year compared to these expectations will ultimately decide whether markets hold and digest the Q4 gains or give them back (and possibly more) as reality may not match these optimistic assumptions,” he added.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

4.png

Research

This months PPGC covered four main areas. Firstly, debriefing the progress and status of the mainnet implementation of the Ahmedabad hard fork. Secondly, a retrospective on the testnet phase of the Ahemdabad Hard Fork. Thirdly, an update on PIP-36 which involves replaying failed state syncs. Lastly, PIP-47 which pushes upgrades to the Polygon Protocol Council.

article-image

Institutions to test out the settlement of “digital assets and currencies” on a network that annually carries more than 5 billion financial messages

article-image

After Bitwise’s XRP ETF filing this week, one industry watcher notes: “Politics will determine whether this happens soon or in a few years”

article-image

Plus, a look back at some of the SEC’s biggest enforcement moves under Gurbir Grewal

article-image

The forward-looking financial system is being championed by several contributors to India’s UPI digital money system

article-image

Multiple teams are pursuing integration cross-chain and off-chain

article-image

An SEC spokesperson told Blockworks the Ripple judgment clashes with Supreme Court precedent and securities laws