Decision on Bitcoin Spot ETF Approaching, Sell The News Momentum Strengthening

Image : A bitcoin coin on top of a trading chart Source : Photo by Kanchanara on Unsplash

The crypto market is eagerly awaiting a crucial decision from the U.S. Securities and Exchange Commission (SEC) regarding the approval of a Bitcoin spot ETF.

According to the latest report from Reuters, the SEC may provide information to applicants for the Bitcoin spot ETF approval around January 2 or 3, 2024. This decision has been long-awaited and could be a turning point for the crypto market.

Applicants for Bitcoin spot ETFs were notified in advance so they could prepare for a launch on January 10. The ARK Investment Bitcoin spot ETF application will be the first to receive notification of acceptance or rejection.

If approved, it is highly likely that applications from BlackRock, Fidelity, Invesco, and others will also receive approval. On the other hand, delays or rejections could apply to other applications.

Meanwhile, in recent times, the fee structure for ETFs has been taking shape, with Valkyrie announcing a management fee of 0.80%, similar to the rate proposed by Ark/21shares.

Fidelity, on the other hand, plans to offer a very low fee of 0.39% for their Wise Origin Bitcoin Fund. Invesco offers a 0.59% fee with a six-month waiver for the first US$5 billion in assets.

Bitcoin Spot ETF Approval or Rejection Could Create Sell the News Momentum

News of the approval or rejection of a Bitcoin spot ETF, according to CryptoQuant, could cause market volatility due to the "sell the news" phenomenon, which is a term describing how asset prices and sentiment rise ahead of bullish events, only to fall immediately afterward due to strong selling pressure.

Image : Chart Source : Photo by Dylan Calluy on Unsplash

Reinforcing their analysis, CryptoQuant analysts point to data indicating that current Bitcoin market participants are holding substantial unrealized gains after the digital asset rallied above the $40,000 mark.

Short-term Bitcoin holders are experiencing a 30% unrealized profit margin, historically preceding price corrections," the report states.

CryptoQuant analysts add that Bitcoin miners are also experiencing significant unrealized gains, which could contribute to selling pressure on BTC.

"We've seen an increase in miner selling over the past few weeks as prices stay above $40,000," the report adds.

On the other hand, according to data from the crypto options trading platform Greeks.live, the approval of a Bitcoin spot ETF by the SEC may not trigger a significant crypto market rally.

Data shows that implied volatility for options on January 12, closely related to the potential ETF launch, has actually decreased rather than increased.

Bitcoin spot ETFs have been one of the catalysts that propelled Bitcoin prices up by 155% throughout 2023, successfully rebounding to the $40,000 level after a drastic decline at the end of 2022.

*Disclaimer:

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