Thanks to a social media rumor regarding the SEC's approval of applications to create an ETF with Bitcoin as the underlying asset, it appears that the cryptocurrency genie has been unleashed from its digital bottle. As a result, BTC USD quotes have surged to their highest level since May 2022, a time marked by the TerraUSD-Luna pair's meteoric rise, followed by a chain of bankruptcies that severely shook confidence within the digital asset industry. Nevertheless, the crypto market is experiencing a revival, and Bitcoin has enthusiastically responded to this news with a significant rally.
Investors are keenly aware that if the Securities and Exchange Commission were to give its nod to applications from BlackRock and other entities seeking to establish an ETF with Bitcoin as its underlying asset, it would effectively usher in a new asset class. This development would provide a sense of security, as it implies a reduced risk of fraudulent transactions, even though the SEC has previously been clear in stating its inability to provide full protection in the realm of crypto assets.
According to JP Morgan, should the applications fail to secure approval by January 10, the SEC may find itself embroiled in numerous legal disputes, one of which it has already lost against crypto firm Grayscale Investments. The question then arises, is it prudent to persist with obstinacy?
It's plausible that the approval may have already been granted, but this information is being kept under wraps. At the very least, the website of the Depository Trust and Clearing Corporation indicates that BlackRock's iShares Bitcoin Trust has been listed. Representatives from both the SEC and the world's largest asset management company have chosen to remain tight-lipped on the matter. Furthermore, reports suggest that potential buyers for this ETF already exist. Consequently, it comes as no surprise that Bitcoin has surged, breaking through the $35,000 mark, with wagers on BTC USD climbing to $40,000 gaining traction in the options market.
Looking ahead, the rapid ascent of the crypto market leader may lead one to surmise that news of the SEC's approval for a specialized exchange-traded fund with Bitcoin as the underlying asset has already been priced into BTC USD quotes. One might wonder whether we are now entering a phase of selling based on facts after having bought on rumors.
The precedent set by the approval of a Bitcoin futures ETF in 2021 indicates that the upward trajectory of the cryptocurrency leader could persist. It's worth noting that the macroeconomic backdrop during that time was more favorable for digital assets, with financial markets not ruffled by Treasury bond yields nearing 5% and stock indices remaining stable.
Nonetheless, according to data from CoinShares, capital inflows into funds focused on crypto assets have totaled $179 million over a four-week period, a figure significantly lower than the $807 million in the same timeframe following BlackRock's ETF application. This suggests that investors are approaching the situation with caution, and the approval of the application could potentially unleash a flood of investment.
This article was written in cooperation with TradingView