Bitcoin (BTC) has surged above $44,000 on Monday, January 8, 2024, as traders anticipate a possible approval of the first spot Bitcoin ETF in the U.S. The leading cryptocurrency has gained over 10% in the past week, outperforming most altcoins and reaching its highest level since April 2022
One of the main drivers of the bullish momentum in the Bitcoin market is the expectation of a positive decision from the U.S. Securities and Exchange Commission (SEC) on the pending applications for a spot Bitcoin ETF. A spot Bitcoin ETF would track the actual price of Bitcoin, rather than its futures contracts, and allow investors to buy and sell the cryptocurrency through a regulated platform.
According to Bloomberg News, the SEC has given the would-be Bitcoin ETF issuers until Monday morning in Washington to submit any last-minute revisions to their applications. The SEC has until January 10 to approve or reject the proposals, or extend the review period for another 45 days. However, some analysts believe that the SEC is unlikely to delay the decision further, as it has already received enough feedback from the public and the industry.
Among the 11 spot Bitcoin ETF applicants are some of the biggest names in the financial sector, such as BlackRock, Fidelity, VanEck, and WisdomTree. BlackRock, the world’s largest asset manager, has reportedly set aside $10 million as seed money for its spot Bitcoin ETF, indicating its confidence in the product.
Bitcoin Faces Resistance and Risks
While the Bitcoin ETF approval could be a major catalyst for the cryptocurrency market, it is not a guaranteed outcome. The SEC has been historically reluctant to approve any Bitcoin-related products, citing concerns over market manipulation, investor protection, and regulatory oversight. The SEC has only approved two Bitcoin futures ETFs so far, which track the price of Bitcoin futures contracts, not the actual Bitcoin.
Some experts have also warned that the Bitcoin ETF approval could trigger a “sell the news” event, as traders may take profits after the announcement. Arthur Hayes, the former CEO of BitMEX, a popular crypto derivatives exchange, has predicted that Bitcoin could face a 40% correction in March, similar to the one that occurred in 2020 after the COVID-19 pandemic. Hayes argued that the Bitcoin ETF approval could expose the cryptocurrency to the risks of the traditional financial system, such as banking crises and regulatory crackdowns.
Moreover, Bitcoin still faces some technical and fundamental challenges, such as the high network fees, the environmental impact, the regulatory uncertainty, and the competition from other cryptocurrencies. Bitcoin’s dominance, which measures its market share relative to other cryptocurrencies, has declined from over 70% in January 2020 to around 40% in January 20244. Bitcoin’s volatility, which measures its price fluctuations, has also increased from around 3% in December 2023 to over 5% in January 20245.
Bitcoin Outlook Remains Positive
Despite the potential headwinds, many analysts and investors remain optimistic about the long-term prospects of Bitcoin. They believe that Bitcoin has a unique value proposition as a scarce, decentralized, and censorship-resistant form of digital money that can hedge against inflation, currency devaluation, and geopolitical risks. They also expect that the Bitcoin ETF approval could attract more institutional and retail investors to the cryptocurrency market, increasing its liquidity, adoption, and innovation.
Some of the bullish predictions for Bitcoin’s price include $100,000 by the end of 2024, $500,000 by 2030, and $1 million by 2037. These forecasts are based on various models and assumptions, such as the stock-to-flow ratio, the Metcalfe’s law, the network effect, and the halving cycles. However, these predictions should be taken with a grain of salt, as they are subject to many uncertainties and variables.
As of writing, Bitcoin is trading at $43,691.50, up 0.10% in the last 24 hours, according to CoinMarketCap. The cryptocurrency has a market capitalization of $820 billion, making it the ninth-largest asset in the world by market value.