Bitcoin counts down to SEC's ETF decision

The SEC must make a decision by today (Wednesday, January 10th) whether or not to approve a first-ever Bitcoin exchange-traded fund (ETF).

It’s a day that many in the crypto world had been anticipating for a long time now (and one that we had written much about since last year).

A first-ever Bitcoin ETF would be a watershed moment in bringing cryptocurrencies into the mainstream.

Upon regulatory approval, if granted by the US Securities and Exchange Commission (SEC), a Bitcoin ETF may herald wider and easier access to the swarms of retail investors to the underlying cryptocurrency.

And if retail investors keep sending their money into this Bitcoin ETF, that may well push Bitcoin prices higher over the long term.

But what about Bitcoin’s immediate reaction this week?

Many crypto watchers have been speculating about the prospects of the SEC’s approval being the catalyst for a “sell the news” event.

That means Bitcoin prices could fall following such an announcement.

After all, Bitcoin had already soared by 157% in 2023, in anticipation of this looming announcement by the SEC.

Official confirmation of an SEC-approved Bitcoin ETF may instead prompt investors to sell the crypto and book profits.

Bitcoin gave preview of "sell the (fake) news"

And indeed, just yesterday, market watchers were shown what could happen if/when the Bitcoin ETF is approved.

In case you missed it yesterday (Tuesday, January 9th):

• the SEC’s official X account (formerly known as Twitter) was “compromised” shortly after 4:00PM EST.
  The fake post by the hacker claimed that the SEC had approved a Bitcoin ETF.
   
• Bitcoin quickly surged to hit $47,938.10 – its highest levels since March 2022 - but only stayed up briefly.
   
• After that initial 5-minute upwards candlestick, prices quickly retreated and fell to as low as $44,750.10.
   
• It took the SEC Chair Gary Gensler 15 minutes before publicly denying, in a separate X post, that “unauthorized tweet”.
  
  Bitcoin’s prices fell by about 6.6% (or $3,188) during that 15-minute window between that initial “unauthorised tweet” and Gensler’s own post.

 

In fewer words, the immediate reaction from yesterday’s (fake) news was to sell!

While that was the preview, the main event has yet to happen, leaving traders and investors, and definitely those Bitcoin ETF issuers, on tenterhooks in the interim.

POTENTIAL SCENARIOS:

• If the SEC does approve a Bitcoin ETF later today, Bitcoin may see another spike to $48,000, before swiftly faltering once more in a repeat of yesterday's price action.

• If the SEC delays or rejects these Bitcoin ETF applications, Bitcoin may well falter below $45k, but should still find support above the psychologically-important $40,000 mark.

Such declines may however present a “buy-the-dip” opportunity for longer-term Bitcoin bulls (those who believe that prices will keep going higher).

After all, the numerous applications filed by big-time institutional heavyweights such as BlackRock only lay bare the underlying demand for such a product (Bitcoin ETF).

That suggests that the SEC can only push back for so long, before perhaps eventually having to give in to the market’s demands, perhaps as soon as today.