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A false report of spot bitcoin ETF approval gave a taste of the sort of price action bitcoin could see if and when the real thing happens.<\/p>\n
Genuine approvals by the US Securities and Exchange Commission could spur much larger price increases, market observers told Blockworks, as the media mistake was evidence such an event is not yet fully priced in.<\/p>\n
A report that the SEC greenlit a spot bitcoin ETF proposal by BlackRock \u2014 which Cointelegraph later acknowledged was incorrect<\/a> \u2014 resulted in bitcoin\u2019s price jumping in minutes by roughly 7% to about $30,000.<\/p>\n Bitcoin\u2019s (BTC<\/a>) price went back down after confirmation the SEC had not in fact approved the product. It stood at $28,375 at 3 pm ET Tuesday \u2014 down 0.6% in the last 24 hours.\u00a0<\/p>\n Read more:<\/strong> Fake bitcoin ETF report triggers price jump to $30k, $100M wave of liquidations<\/a><\/p>\n \u201cWe got an early glimpse of the positive sentiment and powerful demand that such a product will create across the board,\u201d said Jeff Embry, managing partner at crypto hedge fund Globe 3 Capital. \u201cIt also showed that market participants and traders have their finger on the trading button and that there is a pent-up demand for good news on the crypto front.\u201d\u00a0<\/p>\n Globe 3 Capital had forecasted at the beginning of 2023 that BTC\u2019s price could reach $42,000 by the end of the year. That level would be attainable \u201cwithin a short period\u201d after a spot bitcoin ETF<\/a> is approved, Embry added.<\/p>\n \u201cYou will see demand for this easily accessible ETF bitcoin product from the individual retail, retirement accounts and institutional \u2014 and most likely corporate treasury departments,\u201d he said.\u00a0\u00a0<\/p>\n Read more:<\/strong> BlackRock\u2019s Fink notes \u2018pent-up interest\u2019 after fake bitcoin ETF news<\/a><\/p>\n LMAX Group market strategist Joel Kruger, who noted such a product will help usher in \u201cmass institutional adoption,\u201d expects an even larger spike than to $42,000.<\/p>\n \u201cGiven bitcoin\u2019s scarcity, we expect this will translate to a rally that over the course of a few months pushes back towards a retest and break of the record high,\u201d Kruger told Blockworks.\u00a0<\/p>\n Bitcoin reached an all-time high of about $69,000 in November 2021.\u00a0<\/p>\n Matteo Greco, a research analyst at Fineqia International, said in the hour following the false report, more than $100 million in liquidations \u2014 or forced closure of a trading position \u2014 occurred. Roughly $70 million of these liquidations occurred in short positions, while $30 million were in long positions.\u00a0<\/p>\n \u201cAn approval would represent a massive inflow from [traditional finance], and as we saw yesterday, the event of an approval is not priced in by the market yet,\u201d Greco added.\u00a0<\/p>\n The price spike from the false report came a couple days after the SEC\u2019s window to appeal a court victory by Grayscale Investments expired. The regulator chose not to challenge the August ruling<\/a>, in which judges decided the SEC blocking the conversion of the Grayscale Bitcoin Trust (GBTC) to an ETF \u2014 but allowing bitcoin futures ETFs to trade \u2014 was \u201carbitrary and capricious.\u201d<\/p>\n Grayscale has said \u201cGBTC<\/a> remains operationally ready to convert to an ETF upon appropriate regulatory approvals.\u201d<\/p>\n \u201cWe believe the Grayscale court win is not currently priced in either,\u201d Embry said. \u201cDue to all the confusion created by the SEC most investors are in a \u2018we\u2019ll believe it when we finally see it\u2019 mindset.\u201d<\/p>\n The SEC is set to rule on a planned bitcoin ETF by Ark Invest and 21Shares<\/a> by Jan. 10. It can take until March to decide on similar products by BlackRock, Fidelity and others, though many expect a decision on a bunch of proposed bitcoin ETFs to come at the same time.\u00a0<\/p>\n GBTC shares \u2014 which trade on the secondary market at a discount or premium \u2014 had a discount of 14.77% on Monday, according<\/a> to YCharts.com. This is down from a discount of more than 40% a few months ago.<\/p>\n \u201cThis shows that investors do anticipate an ETF approval eventually and the Grayscale court win was a huge step in the right direction,\u201d Embry said. \u201cThat is a great indication that some of the pricing power is priced in, but there is plenty more to go.\u201d<\/p>\n Greco noted that GBTC conversion to an ETF would give a long-awaited opportunity to sell for many shareholders, which could mitigate the short-term effect of an approval.<\/p>\n He added: \u201cIt is safe to say, anyway, that an approval would cause massive inflow of capital and volume in a matter of weeks after the launch of the products.\u201d<\/p>\n Don\u2019t miss the next big story \u2013 join our\u00a0free daily newsletter<\/a>.<\/strong><\/p>\n
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