At this moment, it is expected that the SEC will finally approve the issuance of ETFs on Bitcoin spot on US exchanges. The expectation is for tomorrow, Wednesday, January 10, 2024, but what will be the price of BTC after this approval?
In reality, we need to distinguish between three different scenarios, namely the short period of time that will elapse between the news of approval and the actual launch on the markets, the days immediately following the actual launch, and the medium-long term.
The price of BTC after the news of the approval of Bitcoin spot ETFs
According to some analysts, as soon as the news of the SEC’s approval is made public, a sell the news could trigger, allowing several speculators to monetize their gains.
Since the news is expected for tomorrow evening, there is even still the possibility that the BTC price could rise further, compared to the current $46,000, so there could be many speculators who could monetize by selling.
It should not be forgotten that just three months ago the price was $27,000, and that throughout its entire history the price of Bitcoin has been above $45,000 only for a few months, and only in 2021.
It is hard to imagine that there is no one who chooses to monetize profits as soon as they believe that the price can no longer increase.
In fact, what will happen next is still the opposite.
What will happen to the price of Bitcoin after the launch of ETFs on the market?
The launch on the US stock exchanges of the Bitcoin spot ETFs is expected to take place between Thursday and Friday.
What is still uncertain is what the market reception will be for this kind of products.
For example, on the Toronto Stock Exchange (TSX), Bitcoin spot ETFs have been present for several months, and the most traded one (BTCC, Purpose Bitcoin ETF) had a trading volume that just surpassed $10 million during the last session.
Just think that on the world’s main crypto exchange (Binance) in the last 24 hours, spot Bitcoin trades amounted to a total value well over 6 billion dollars.
At this point, it is easy to imagine that, for example, the new BlackRock ETF could outperform 10 million dollars in trading on the first day of listing.
Depending on what will happen on the day of the market launch, it will be known whether the price of Bitcoin will react positively or negatively, although the two things should actually happen simultaneously.
However, it should be emphasized that the issuers of these new ETFs are already ready to sell shares for tens of millions of dollars, so it is conceivable that the daily volume will be much higher than that of BTCC from the first day.
Since there are still no certainties about it, it is possible that this dynamic has not yet been priced by the markets, also because so far Bitcoin spot ETFs have not performed particularly well on any exchange in the world.
The medium term
However, several analysts argue that the demand for Bitcoin spot ETFs in the markets could be such as to drive up the price of Bitcoin.
In particular, there are rumors that BlackRock has prepared to purchase up to $2 billion worth of BTC in just the first week of its presence in the markets of its new ETF.
There are several hypotheses circulating, but according to many of them, by 2024 or 2025, at least a hundred billion dollars could flow into these new products, with positive effects on the price of Bitcoin.
In addition to this, starting from March, the Fed could begin to make its monetary policy less restrictive by starting to cut interest rates, and in April there will be the fourth Bitcoin halving.
However, a lot will depend on when the retracement that many are expecting will start, after the +68% of the last three months, how long it will last, how deep it will be, and from which point it will start.
In fact, if it were to start from $50,000, it could be significantly different from one that started right now from $46,000, and if it were to start at $60,000, it would still be different.
Furthermore, if it were to last only a few weeks, it would certainly be different compared to, for example, a duration of a few months.
What is certain, however, is that these dynamics have completely decoupled the price of Bitcoin from the Nasdaq or the stock market during this period.
Bulls and bears
At this moment, bulls seem to be inclined to see the price of Bitcoin rise to at least $50,000.
However, hypotheses are also starting to circulate that see it at $60,000, and the figures become even more significant in the medium term.
The peak of this cycle is often placed at or above $100,000 or even above $200,000, with the Stock-to-Flow indicating a figure even higher than $500,000.
The bears, on the other hand, are considering the possibility of a short-term retracement.
The hypotheses being discussed are that the price of Bitcoin could decrease by 10%, or 20%, or even 30% due to sell the news.
A decline of more than 10% would mean a return to around $40,000, which is in line with the price at the beginning of December. A similar scenario would be perfectly normal.
If instead the loss were to be 20%, the hypothesis would be a return to around $35,000.
Note that this is precisely the figure that Bitcoin’s price should theoretically have at the time of the April halving if the trends of past cycles were to repeat.
However, it is not at all absurd to think that after a possible return to $35,000, the price could rise even before April.
The other hypothesis is a return to around $30,000. In this case, it would probably not just be a correction or temporary retracement, but a real halt to the small bull run that started in October.
In the event that Bitcoin spot ETFs receive a lukewarm reception from US exchanges, this scenario cannot be ruled out.