January 8, 2024 at 11:42 GMTModified date: January 8, 2024 at 11:42 GMT
January 8, 2024 at 11:42 GMT

Spot BTC ETF to get approved this week; mere 5% risk of rejection

Spot Bitcoin ETFs in the US only stand a mere 5% chance of denial, as per market analysts, who are riding on the optimism for an approval this week.

Spot BTC ETF to get approved this week; mere 5% risk of rejection

The highly-anticipated week, which could see a potential approval of spot Bitcoin exchange-traded funds (ETF), is finally here.

Fourteen firms, including big names like BlackRock, Fidelity, and WisdomTree, are waiting for the US Securities and Exchange Commission’s (SEC) verdict after submitting their applications last year.

Recent meetings between the SEC and major stock exchanges such as the NYSE, Nasdaq, and CBOE have heightened expectations. These discussions are believed to have been key in the upcoming launch of the proposed investment products.

Additionally, significant filings by Grayscale Bitcoin Trust, Fidelity, and VanEck have been made. They submitted Form 8-A registrations last week, which is likely the final step before the SEC’s decision.

Odds of Approval raised to over 95%

Over the weekend, multiple leading market analysts were seen raising the odds of an ETF approval in the US. 

Bloomberg analyst James Seyffart, who initially predicted a 90% chance of spot Bitcoin ETF approval by January, has now increased his estimate to an impressive 95%. 

This was followed by Bloomberg’s senior ETF analyst, Eric Balchunas, raising his confidence in similar proportions. This only left a meagre 5% change of rejection, suggesting that the proposals in front of the SEC are less likely to face further delays.

They revealed their opinion when an X user asked what would happen if the 10% played out. Raising the odds of an approval by another 5%, Seyffart laid out scenarios if it happens otherwise. This included ARK withdrawing, regulatory pushback, or intervention by the Biden administration. 

However, even these were marked as ‘unlikely’, with Balchunas echoing Seyffart’s sentiments saying:

An official FOMO warning

In the midst of all this excitement, a word of caution was given by the SEC. 

Director of the SEC’s Office of Investor Education and Advocacy, Lori Schock, has issued a warning against the FOMO (Fear Of Missing Out), which could push investors to make quick investment decisions.  

She emphasised how risky cryptocurrencies, ICOs, meme tokens and NFTs are, despite their popularity, and asked investors to stay grounded and not get carried away by the hype.

The educational arm of the SEC also took to social media to post this warning last week. It linked its “Say no go to FOMO” educational resource which was posted first in the beginning of 2021 during the bull run.

The calm before the storm

In this background, top cryptocurrencies like Bitcoin ($BTC) and Ethereum ($ETH), have mostly been trading flat. 

The top coin has not moved beyond the $45K mark after briefly touching that price level last week. It has also been trading range-bound, between $43K and $44K, over the last few days.

Ethereum’s price movements were similar as well. It has only moved between the range of $2,170 and $2,300 recently. 

However, the Bollinger Bands of both of these coins were widening and moving away from each other at press time. This hinted the possibility of high price volatility in the coming trading sessions. 

Other indicators, like the Awesome Oscillator (AO), which measures the momentum of the market, showed green histograms above the zero line for Bitcoin. This meant a shift towards a bullish momentum.

The sentiment was strengthened by the Moving Average Convergence/Divergence (MACD) indicator as well. The MACD lines experienced a bullish crossover of lines recently, after which green bars were seen on its chart. 

The Relative Strength Index (RSI) for $BTC was moving towards the overbought region and was just below the 70 mark at press time, indicating a fairly neutral sentiment for the coin. 

Indicators showed a similar momentum for Ethereum. However, most of them were yet to fully enter the bullish zones on their respective charts as compared to that of Bitcoin.