The upcoming decision of the Securities and Exchange Commission (SEC) on the approval of a Bitcoin spot ETF has sent the crypto community into an endless debate. While renowned financial experts, such as Peter Schiff, predict a significant price decline even before the ETF is launched, others suggest that the momentum build-up after the halving in 2024 or 2025 may turn the tide in favor of the market.
A Tale of Two Different Perspectives
There are two distinct paradigms influencing opinions about the impact of a Bitcoin ETF on the cryptocurrency market. On one hand, there’s Peter Schiff, chief economist at Euro Pacific Asset Management and a gold bug who foresees a “sell-the-news” event leading to a major drop in the price of bitcoin just before the ETF launch. On the flip side, AllianceBernstein analysts believe that the ETF approval will factor into the market gradually and expect momentum to build post-halving in 2024 or 2025.
When will #Bitcoin crash?
— Peter Schiff (@PeterSchiff) November 9, 2023
Buy-the-Rumor, Sell-the-News: Will it Hold True for Bitcoin ETF?
- An ancient adage of the financial sector seems appropriate when pondering the potential reaction of the bitcoin market to the ETF approval: buy the rumor, sell the news.
- Historically, following expected approvals, investors have often sold their holdings, causing the price of the asset in question to decline.
- However, other factors come into play with a Bitcoin Spot ETF, which could present different scenarios for the market.
Crypto Rover discusses the dynamics of anticipating the ETF approval, reminding us of the intricacies involved in the phenomenon of ‘buy-the-rumor, sell-the-news’. It highlights the emergence of two groups of investors: anticipators and institutions.
Anticipators vs. Institutions
The anticipators are those who have bought bitcoin with the expectation of selling upon hearing the news of ETF approval. This group, often individual investors, is hoping for short-term gains from market volatility. However, institutional investors take a more long-term approach by actively buying into the ETF ahead of its official listing.
Is the #Bitcoin Spot ETF a buy or sell the news event?
Let me break it down.
There will be two types of people.
1. You have the people who bought Bitcoin anticipating that the ETF will get accepted and will sell once the news comes out.
2. You have institutions that are… pic.twitter.com/Xm9O0kSu7I
— Crypto Rover (@rovercrc) November 13, 2023
Crypto Rover suggests that the buying pressure exerted by institutions may overshadow the selling activities of anticipators. This could potentially disrupt the standard ‘buy-the-rumor, sell-the-news’ narrative usually seen in financial markets.
Potential Financial Implications of Bitcoin ETF Approval
- A Bitcoin Spot ETF could have massive financial implications ranging between $200 billion and $300 billion in the market.
- All approved ETFs are expected to be backed 1:1 by actual Bitcoin, ensuring price stability and helping support the financial markets.
- Institutional investment in a Bitcoin ETF could introduce a new level of legitimacy and attention to the crypto industry.
The weight of such heavy investments on both sides – anticipators and institutions – may create an intense atmosphere surrounding the ETF approval decision. With a large influx of capital paired with the backing of real Bitcoin, the chances of witnessing unforeseen market movements increase.
Watching and Waiting: The Crypto Community’s Stance
As the SEC announcement looms closer, the crypto community eagerly awaits the decision that holds potential to shift Bitcoin’s trajectory in the post-ETF approval landscape. Judging by recent news about BTC price surges following BlackRock’s proposed spot Bitcoin ETF proposal, many industry experts wonder whether an approved ETF could inject further enthusiasm into the market or instead trigger a decline.
While there’s no surefire way of predicting how the decision will impact Bitcoin’s price, this period of uncertainty and excitement makes for dynamic discussions and fuels anticipation among investors. Only time will tell what the outcome of the SEC ruling may be. Until then, the crypto community continues to debate, speculate, and gear up for whatever might lie ahead in their collective pursuit of profit, protection, and prosperity.
