Market Insight: Bitcoin ETFs are finally getting the green light, sparking a surge in the crypto community’s excitement. The official approval from the U.S. Securities and Exchange Commission has marked a significant turning point, with 11 applications, including those from BlackRock, Ark Investments/21Shares, Fidelity, and Invesco, paving the way for exchange-traded funds to track bitcoin.
With most of these ETFs expected to commence trading on Thursday, estimates for first-year inflows range from $5 billion to a staggering $100 billion. While these ETFs offer broader access to the cryptocurrency, the question remains whether the notoriously volatile bitcoin will find acceptance among a larger investor base.
Despite the approval, bitcoin’s value remained relatively stable in Asian trading hours, settling at $46,337. This comes after the world’s largest cryptocurrency experienced a 70% surge since mid-October, driven by anticipation of the U.S. regulatory decision.
In the broader market, investors are closely monitoring the U.S. inflation report scheduled for later in the day. The report could impact the Federal Reserve’s decisions on rate cuts in the coming year. Traders, while reevaluating the likelihood of Fed easing in 2024, are still pricing in 140 basis points of rate cuts, compared to the Fed’s projection of 75 bps.
Thursday’s inflation report will provide insights into whether inflation is aligning with the Fed’s target of 2%. With traders exercising caution in their decision-making, currency markets saw fluctuations, with the Japanese yen recovering some losses against the dollar and stabilizing at 145.36.
In equities, the Nikkei continued its impressive performance, surpassing 35,000 for the first time in nearly 34 years. This achievement adds to the strong start of the year for the Nikkei, which was the best-performing Asian bourse in 2023.
Futures indicate a positive sentiment extending to European markets, with minimal economic data scheduled for the region on Thursday.
Key Developments for Thursday:
- Economic events: CPI data for Portugal, Netherlands, and the U.S.
