The oldest cryptocurrency Bitcoin has shown a clear upward trend in recent weeks after months of sideways movement. The reason is identified as the possible imminent approval of the first Bitcoin spot ETF in the USA. But what happens to the BTC price if the application is rejected? That’s what experts say.
• Several providers have already filed for Bitcoin spot ETFs with the SEC
• Bitcoin driven by hopes of early ETF approval
• Rejection of a Bitcoin ETF is likely to have a negative impact on the BTC price
The approval of a Bitcoin spot ETF in the US has long been a great hope of many crypto enthusiasts. Numerous different providers such as BlackRock, Grayscale, VanEck, WisdomTree, Fidelity, 21Shares and ARK Invest have already submitted applications for approval of their own Bitcoin ETFs, and in most cases several attempts have been made. To date, no such crypto product has been approved by the US Securities and Exchange Commission (SEC). The authority is already known for its crypto skepticism and is in conflict with various crypto service providers.
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This is why a Bitcoin spot ETF would be important
Why are numerous crypto companies pinning their hopes on a Bitcoin spot ETF? Such a crypto product makes it possible for institutional investors and small investors to invest in the original cyber currency without having to purchase or sell tokens themselves on a crypto exchange. Since investing in the crypto sector is made much easier in this way, it is hoped that the Bitcoin price could benefit significantly from this.
In fact, the price of the largest cyber currency by market capitalization had already benefited in the past from rumors that a Bitcoin ETF would soon be approved. This was not until the end of October, when the BTC price temporarily climbed above the much-noticed $35,000 mark. “The hope for the final approval of an exchange-traded Bitcoin fund across the Atlantic acts as a tip of the scales,” said crypto expert Timo Emden, commenting on the recent increase, according to the German Press Agency.
The jump in price was a great relief for crypto enthusiasts, after all, Bitcoin had been trending sideways in recent months after hitting a 52-week low of $15,790.86 about a year ago. However, it must be said that a Bitcoin rally based on hopes of spot ETF approval has not always been sustainable in the past. Nevertheless, all crypto experts seem to agree that the BTC price should benefit from a final approval of a spot ETF.
On the other hand, of course, there is the question of what would happen to the Bitcoin price if such an ETF were ultimately rejected again. The crypto portal CoinDesk asked various crypto experts about this.
This could be the impact of a rejection of the Bitcoin ETF
Not surprisingly, the various experts agree that a rejection of the Bitcoin spot ETF is likely to have a negative impact on the price of the digital currency – at least in the short term. In this case, the price of Bitcoin could fall below $30,000, according to CEC Capital crypto trading advisor Laurent Kssis. For comparison: Bitcoin is currently trading at $36,875. However, the expert believes that a deeper fall to even $25,000 is unlikely unless the SEC categorically excludes a spot ETF. However, he assumes that if the proposal is rejected, solutions will continue to be sought so that the project can still be implemented. In addition, other bullish catalysts such as the upcoming Bitcoin halving next year would affect the price and mitigate a price fall caused by an ETF rejection.
Meanwhile, Hashdex CIO Samir Kerbage appears completely unconcerned. Because even if a spot ETF is not approved any time soon, the arguments for Bitcoin investments remain strong: “More investors are beginning to appreciate the advantages of Bitcoin as a store of value or a type of digital gold,” the expert told CoinDesk. He also cites the upcoming Bitcoin halving as another positive price driver: “If history repeats itself again, then the BTC price will react positively to the upcoming reduction in supply.” He remains convinced: “No matter when a Bitcoin spot ETF is approved, the outlook for the world’s first and largest cryptocurrency has never been better.”
MarketVector Indexes product strategist Martin Leinweber is not quite as confident: “If the ETF is not approved, it will be a big disappointment for the market,” he comments to CoinDesk. “The Bitcoin Spot ETF is often seen as a milestone of institutional acceptance and integration into the mainstream financial system.” Nevertheless, the continued existence of Bitcoin in no way depends on an ETF, even if the Bitcoin price is likely to develop negatively in the short term due to a rejection and suffer from a “bearish shadow”: “I believe that the lack of an ETF will have a significant impact on the crypto market would burden,” he said. “It would require a period of adjustment and rebalancing as the market would need to decouple and develop a new narrative for the future.”
One can only speculate as to how this will actually happen, because even if numerous market participants remain optimistic that there will be a Bitcoin spot ETF in the future, it is still absolutely unclear when this will happen. Until then, crypto enthusiasts will have to continue to be patient.
Editorial team finanzen.net