Bitcoin BTC
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The broader cryptocurrency market was trading lower on Friday as it awaited news from the Securities and Exchange Commission. We continually review more than a dozen applications for spot ETFs. The price of the world’s largest cryptocurrency by market capitalization fell 1.6% to $43,442 at 10:57 a.m. ET.
Despite a brief pullback earlier this week, ETC Group head of research André Dragosch said there is still substantial evidence supporting the possibility of a spot Bitcoin ETF being approved in January.
“After Wednesday’s sell-off, we received more evidence to suggest there is still no material change in investor expectations for ETF approval in January,” he said, referring to new filings from several applicants. “On the contrary, we have received more evidence in the past few days pointing in that direction.”
On Thursday, Grayscale, Ark Investments, Valkyrie and VanEck contaminated The new Form 8-A represents further progress toward potential approval. The SEC has not yet approved a spot Bitcoin fund and has not said when a decision will be made.
GBTC’s discount to NAV narrows
Dragosch said Grayscale Bitcoin is The trust discount rate compared to net asset value decreased significantly last week. The narrowing of the index that measures each stock’s market price compared to the value of Bitcoin suggests investors believe Grayscale can convert the fund into an ETF and remove restrictions that keep the discount rate higher.
By the close of trading last Thursday, the discount had narrowed to -5.75%, the lowest in several weeks, according to YCharts data.
Grayscale Bitcoin Trust discounts become even narrower. Image: YCharts.
Grayscale Bitcoin Trust currently trades at a discount because its shares cannot be redeemed for the underlying asset. This means that the only option available to shareholders who want shares is to sell those shares to another potential buyer. Historically, it traded at a premium until the cryptocurrency credit crunch in 2021.
According to Dragosch, a further drawdown of the Grayscale Bitcoin Trust “implies a spot Bitcoin ETF approval probability of approximately 92%.”
The analyst pointed to other factors supporting the continued positive outlook for the approval of a spot Bitcoin ETF this month.
“This week, the SEC held meetings with the New York Stock Exchange, Nasdaq, and Cboe to finalize its opinion on a spot Bitcoin ETF. Additionally, Fidelity filed a securities registration with the SEC for a spot Bitcoin ETF on Wednesday,” he said. “I submitted it,” he added.
Cryptocurrency Sentiment Still Rising
ETC Group’s Crypto Sentiment Index (CSI) remains on the rise despite Wednesday’s sell-off in the Bitcoin market, according to Dragosch. This indicator has risen from a negative reading over the past few weeks to its current reading of just below 1.
“Our internal CSI has been trending upward again recently, with 12 out of 15 indicators currently above their short-term trends, indicating positive sentiment,” Dragosch said. He added, “Compared to last week, we confirmed a significant reversal in the BTC put call trading volume ratio and BTC exchange inflow volume.”
Despite the recent sell-off in the Bitcoin market, ETC Group’s cryptocurrency sentiment index remains high. Image: ETC Group
Bitcoin market volatility increases
Earlier this week, an analyst reported that the SEC may not yet be ready to approve spot funds. Challenge Market watchers like Bloomberg Intelligence analyst Eric Balchunas.
“We haven’t heard anything other than an endorsement, but we want to give the guy the benefit of the doubt, so we’re asking if he has a source or if he’s just guessing,” the analyst said. said inHe added: “We still expect an approval order to be issued next week.”
Bittrex Global CEO Oliver Linch said in an email to The Block that spot Bitcoin ETF approval is already largely priced into the market. He added, “The effect of the surge in approvals may not be as dramatic as some would like, but the approvals combined with the Bitcoin halving effect could still accumulate and become rampant in 2024.”
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