The Bitcoin community awaits with anticipation the SEC’s decision on the first U.S. spot Bitcoin ETF, a major step towards robust crypto market adoption. Analysts suggest a high likelihood of an SEC announcement this week, potentially triggering significant market movements following Bitcoin’s price reaction in response to the news.
5% Chance Of A Rejection
Last week, representatives from investment management companies, stock exchanges, and the SEC met to review the final amendments to filings for spot bitcoin ETFs. This could pave the way for the first-ever U.S. approval of such funds as early as next week.
Executives and delegates from five firms, who requested anonymity due to the private nature of the discussions, reported that they engaged with SEC officials regarding the S-1 prospectus documents, a mandatory submission for every exchange-traded fund (ETF) seeking approval.
Issuers expect approval for their S-1 filings by mid-next week, following minor changes requested by the SEC, including fee disclosures and market-maker identities due Monday. Additionally, exchanges are finalizing necessary filings for spot bitcoin ETFs, with a key decision from the SEC expected by Jan. 10 on the Ark/21Shares ETF.
However, there’s a 5% chance that the SEC rejects ETFs. According to a Bloomberg analyst, the likelihood of the Bitcoin spot ETF being rejected has decreased from 10% to just 5%. Potential reasons include: Ark withdrawing with March assurances, the SEC presenting new objections or disregarding court decisions, and intervention from the Biden administration, now seem less probable.
Additionally, Better markets urged the SEC in a recent letter to reject spot bitcoin ETPs, including ETFs, citing potential investor harm due to widespread fraud and manipulation in the bitcoin market. The organization’s president, Dennis Kelleher, demanded the need to protect investors and retirees, warning against legitimizing what he views as a risky financial product. He insisted that denying these proposals is a legal requirement.
Bitcoin Price Forecast And Impact
Numerous analysts forecast a strong long-term growth for BTC’s price, with Grayscale CEO Michael Sonnenshein indicating that the ETF could tap into approximately $30 trillion of advised wealth, thereby expanding Bitcoin’s investor base substantially. Nonetheless, despite the bullish long-term outlook for Bitcoin’s price, CryptoQuant warns of a potential immediate ‘sell the news’ reaction.
CryptoQuant anticipates a potential decline in Bitcoin to around $32,000 next month, which may follow the expected approval of a spot ETF. This can be due to traders’ unrealized profits being at a point which typically leads to a market correction. The NUPL metric is currently heading toward the belief/denial region by trading at 49.4%.
However, we expect a short-squeeze in Bitcoin’s price after the ETF approval, potentially breaking its $45K consolidation phase to challenge the $48,100 resistance level. This barrier is expected to be quickly surpassed as long-term holders grow more confident in holding their positions.
Nevertheless, the BTC price might experience a slow down when it reaches the $50K-$52K range, likely due to short-term holders exiting. After this, the momentum could build again, driving the overall crypto market value above the $2 trillion mark.