Bitcoin experienced a mild pullback as traders deliberated the potential response of crypto markets to the anticipated approval of the first US exchange-traded funds (ETFs) directly investing in the digital token by regulators. The leading cryptocurrency recorded a 2.4% decline over the past 24 hours, trading at $42,400 as of 10:31 a.m. Wednesday in Singapore. Bitcoin has marked a 156% surge this year, driven, in part, by expectations that ETFs will stimulate new demand.
An essential consideration is whether the approval of these ETFs will trigger profit-taking, following the notion that investors often “buy the rumor and sell the news.” In simpler terms, the actual interest and impact of spot Bitcoin ETFs, proposed by industry giants like BlackRock Inc. and Fidelity Investments, remain uncertain.
Nic Carter, founding partner at Castle Island Management LLC, expressed a high degree of confidence that the US Securities & Exchange Commission (SEC) would grant approval for spot Bitcoin ETFs before January 10. Speaking on Bloomberg Television, Carter suggested that these funds would expand the base of crypto investors in the medium term, while cautioning about the potential for a “news selling event” in the immediate period.
In the past 24 hours, smaller tokens like Avalanche and Solana experienced more significant losses compared to Bitcoin, and even meme-crowd favorites like Dogwifhat saw declines. BNB, the coin associated with the Binance exchange, defied the overall market trend with a notable 10% ascent.
Bitcoin’s remarkable ascent in 2023 has been driven not only by the prospects of US interest rates declining but also by the anticipation surrounding the approval of spot Bitcoin ETFs. This rally has acted as a restorative force following a steep crash in 2022 that had widespread repercussions across the cryptocurrency industry. Despite the recovery, Bitcoin has yet to surpass its pandemic-era peak of almost $69,000 set in 2021.
