Rising Investor Interest Amid Bitcoin Uncertainty and Potential ETF Approval
Summary:
Bitcoin's fluctuating price at the $47,000 level reflects traders' uncertainty, while the potential approval of a spot Bitcoin Exchange-Traded Fund (ETF) stirs the market. Despite several warnings and cautious measures from the SEC, expert predications indicate a possible increase in Bitcoin's value post ETF approval. Both institutional investors and retail buyers show heightening interest, with a record-breaking number of non-zero amount Bitcoin wallets. However, increased interest results in more risk, and potential investors are urged to conduct thorough research before making decisions.
The frequent changes in the price of Bitcoin (BTC), hovering around $47,000, on January 9 epitomises the uncertainty faced by traders. The possibility of BTC spot Exchange-Traded Fund (ETF) approval has been buoying the market, even as some investors expect a sell-off following the announcement. Newhedge analysis of Bitcoin's monthly returns help highlight why the digital currency's value has been unsteady.
Regardless of the unstable macroeconomic conditions globally, Bitcoin's value has been on an upward trend, with investor interest seeing a surge. On January 8, all candidates vying for a spot Bitcoin ETF completed the final stages of the filing process. This left the U.S. regulatory authority, the Securities Exchange Commission (SEC), to grant potential approval for these spot Bitcoin ETFs.
Jay Clayton, a former chairman of SEC, believes the choice now rests entirely with the governing body since all the required information has been submitted. While Bitcoin values have surpassed double the returns of gold for 2023 and continue to do so into 2024, predictions of a surge to $50,000 are gaining traction among some experts. CEO of MicroStrategy and Bitcoin advocacy leader, Michael Saylor, is of the opinion that the approval of a Bitcoin spot ETF could be the most significant financial event ever since the launch of the S&P 500.
Bitcoin's increasing market presence propelled its market cap to overtake Berkshire Hathaway's on December 5, 2023, ranking it as the 10th largest asset by that assessment. Despite Bitcoin's robust resilience, the SEC has chosen to progress with caution, re-issuing an advisory notice warning against crypto speculation on January 6, and again on January 8.
If approved, the ETF could stimulate a demand of up to $600 billion, forecast analysts at CryptoQuant. Their sentiment is echoed by Galaxy Digital, predicting a hike in price by 74% in the first year following a spot BTC ETF launch. Other financial institutions, including Standard Chartered Bank, estimate a surge in Bitcoin price to $200,000 per BTC by 2025's end.
Spot Bitcoin ETF applicants are also gearing up for a competitive "fee war", with the lowest filed fee report currently being 0.2%. This has led to open interest on Bitcoin futures on CME reaching new heights, surpassing $6.28 billion on January 9.
While the spot ETF approval could lead to increased liquidity and certainty for investors, institutional funds have already had a head start, investing heavily in Bitcoin and crypto in 2023. According to CoinShares, institutional funds invested $2.25 billion in crypto in 2023, a 2.7x growth from the preceding year, making it the third-largest ever investment year.
Institutional funds funneled in excess of $1.93 billion into Bitcoin in 2023, marking the total AUM for Bitcoin at $36.17 billion, dwarfing all other digital currencies. Despite this, the general public's interest in Bitcoin has not been diminished, recording an all-time high for Bitcoin wallets holding non-zero amounts at over 51.6 million on January 2.
Owing to consistent monthly price escalation, Bitcoin's realized cap has surged to $436 billion as of January 8, nearing its record peak at just 7% below the high. Despite this, the relative amount of active Bitcoin to stored supply has diminished, an indicator that holders are yet to move dormant currency into circulation.
The surge in non-zero wallets, vaulted Bitcoin supply, and the increased realized cap herald strong bullish anticipation. However, this article is not providing investment advice or recommendations. Every investor and trader should conduct their own research before making any investment decisions, due to the risks involved.
Published At
1/9/2024 10:12:32 PM
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