- Bitcoin price has held quite well in the past few weeks.
- There is a high possibility that the SEC will approve a Bitcoin ETF soon.
Bitcoin price has held quite well in the past few days. It has remained above $28,000 this week even as American stocks and bonds plunged. The Nasdaq 100 index retreated by more than 6% from the highest point this year. Other indices like the dow Jones and Russell 2000 indices have also retreated.
At the same time, American bond yields have surged to the highest levels in years. The 30-year Bond yield has soared to 5%, the highest level since 2007. The 10-year yield has risen to 4.9% while the spread between the 10 and 2-year yields has plunged recently. Further, the fear and greed index has dropped to the fear zone of 35.
The most likely reason for Bitcoin prices is the upcoming spot Bitcoin ETF approval by the Securities and Exchange Commission (SEC). Blackrock has applied for the iShares Bitcoin Trust—other companies like Fidelity, Franklin Templeton, Grayscale, and Ark Invest.
These hopes are best shown by the performance of the Grayscale Bitcoin Trust (GBTC), which could be transformed into a Bitcoin ETF. The discount to Net Asset Value (NAV) has narrowed to the lowest level in months.
Therefore, the question among many investors is how will a Bitcoin ETF approval impact the price of BTC. Some analysts believe that the BTC price will surge and possibly reach $100k if this happens. This will happen as these companies buy Bitcoin to back their funds.
We got a taste of what will happen on Monday when a false report that the SEC had approved an ETF by Blackrock sent Bitcoin flying. It then retreated after Blackrock denied that claim.
Bitcoin price will rise initially and then either retreat or move sideways after the ETF approval. This is known as buying the rumour and selling the news since Bitcoin has already risen by more than 50% from its lowest level this year.
There is also a likelihood that ETF inflows will not be all that good initially. We have already seen with the Bitcoin Strategy ETF (BITO). While BITO tracks futures, it tends to move in the same direction as Bitcoin. It now has about $852 million in assets under management. Recently, XRP price jumped briefly and then retreated after the partial victory by Ripple in court.
The likely next catalyst that could push Bitcoin price higher will be the anticipation of Bitcoin halving, which will happen in April next year. We recently saw Litecoin price surge from its 2022 lows as traders waited for its August halving.
Contributors
