Source: DALL·E
Bitcoin‘s price has soared to $45,000, marking its highest point since April 2022.
With growing investor anticipation of the decision by the U.S. Securities and Exchange Commission (SEC) regarding the approval of spot Bitcoin exchange-traded funds (ETFs), Bitcoin is currently trading at $45,435 at the time of writing according to CoinMarketCap, up by more than 7% from 24 hours ago.
Source: CoinMarketCap
Investor enthusiasm has intensified following a Reuters report suggesting that the SEC’s decision on the approval of Bitcoin ETFs could come as soon as Tuesday, January 2.
According to Reuters, “the SEC may notify issuers as soon as Tuesday or Wednesday that they have been cleared to launch the following week,” said sources “who spoke on background given the confidential nature of the discussions.”
Potential Impact of SEC’s Expected Approval
The SEC’s potential approval of Bitcoin ETFs would mark a crucial shift in the U.S. regulatory stance towards cryptocurrencies. Traditionally, the SEC has been more inclined towards futures-based ETFs, adopting a cautious approach to direct cryptocurrency investments.
An affirmative decision would signal a broader acceptance of crypto, potentially opening up new avenues for investment and bolstering Bitcoin’s legitimacy among traditional financial sectors, especially when established financial institutions like BlackRock and Fidelity become major Bitcoin ETF issuers.
VanEck Adviser on the Future of Spot Bitcoin ETFs
As the market buzzes with the potential of the SEC’s approval, Gabor Gurbacks, an adviser at VanEck, offered a tempered perspective on the immediate impact of such an event.
“In my view, people tend to overestimate the initial impact of U.S. Bitcoin ETFs,” wrote Gurbacks in a recent post. “Long term, people tend to underestimate the impact of spot Bitcoin ETFs.”
In my view, people tend to overestimate the initial impact of U.S. Bitcoin ETFs. I think maybe a few $100mm flows (mostly recycled) money.
Long term, people tend to underestimate the impact of spot Bitcoin ETFs. If history is any guide, gold is worth studying as a parallel. https://t.co/6vvkA9aC09
— Gabor Gurbacs (@gaborgurbacs) December 31, 2023
Gurbacks suggested that the initial market response might be moderate, with only about $100 million coming from mostly recycled funds from institutional investors finding its way into the market post-approval.
However, Gurbacks emphasized the long-term potential, drawing parallels with the history of gold investment. He also noted the staggering market inflow gold experienced following the introduction of its ETF.
In Gurbacks’s view, the crypto community might be overly focused on the short-term effects, potentially overlooking the broader implications of an ETF, while countries and giant institutions might act differently. “I believe nation states and sovereign wealth funds will hold their Bitcoin directly and secure optionality for mining and their own Bitcoin-based capital markets,” wrote Gurbacks.
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