Bitcoin ETF approval won’t spark crypto market surge, new data reveal

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Crypto options trading platform Greeks.live has suggested that a significant price surge might not occur immediately after the approval of a spot Bitcoin exchange-traded fund (ETF) by the U.S. regulator, according to the platform’s market data.

“We can assume that the market has priced the ETF, and even if it succeeds, it may not result in greater returns,” Greeks.live said on a social media post.

Greeks.live emphasized that its recent market data show minimal volatility in major term implied volatilities (IVs) and prices, despite speculation about the SEC approving the Bitcoin Spot ETF application next Tuesday.

“Looking at the options data, Jan12 options IV, which is strongly correlated to the ETF, fell rather than rose, and the block was almost untraded, accounting for only 2% of the day’s turnover, a low level of share that is very rare,” Greeks.live said.

The platform’s evaluation relies on the minimal volatility noticed in significant-term implied volatilities (IVs) and the present Bitcoin price.

Based on these observations, Greeks.live suggested that the market has likely factored in the potential approval of the spot Bitcoin ETF. Market participants might have anticipated this event and adjusted their positions accordingly, potentially resulting in the actual approval having a restricted impact on prices and volatility.

Following the news of Bitcoin ETF approval, BlackRock, Valkyrie and Van Eck submitted revised S-1 forms to the U.S. Securities and Exchange Commission (SEC) on December 29, the approval deadline for the SEC’s January 2024 considerations. Subsequently, Invesco Galaxy, Bitwise, WisdomTree and Fidelity submitted Form S-1 applications.

In BlackRock’s revised filing, Jane Street and JPMorgan Securities were listed as “authorized participants” for its proposed spot Bitcoin ETF application. BlackRock has confirmed its intention to utilize a cash-only model. Notably, it was the initial user to finalize a trade on JPMorgan’s Tokenized Collateral Network service on October 11.

Bitcoin ETF launch holds trillion-dollar potential

VanEck advisor Gabor Gurbacs maintains that the approval of spot Bitcoin ETFs could attract trillions of dollars to the cryptocurrency sector in the long term and may not immediately affect Bitcoin.

Grubacs shared this view in a social media post, saying the potential impact of a Bitcoin ETF is being exaggerated. This might only attract around $100 million in net inflows at launch, mostly from already-existing funds of large institutional investors.

Gurbacs expressed optimism regarding the long-term impact of the ETFs on Bitcoin, drawing parallels to the increase in gold prices following the launch of gold ETFs.

“Long term, people tend to underestimate the impact of spot Bitcoin ETFs. If history is any guide, gold is worth studying as a parallel,” Gurbacs said.

According to Gurbacs, if the anticipated spot Bitcoin ETF gets approval in the U.S., Bitcoin’s price trend might resemble gold’s path. He noted this could happen faster due to Bitcoin’s limited supply and events like the halving that increases scarcity.

He highlighted that a significant advantage of a spot Bitcoin ETF is its capacity to validate and remove negative associations with Bitcoin for institutional investors and nation-states.

Bloomberg ETF analyst James Seyffart agreed with Gurbacs, saying, “Consensus seems to be (anecdotally) that People are focused on a massive short term impact that I think could be a bit of a let down while at same time not fully appreciating the potential longer term impacts.”

Seyffart acknowledged that while many focus on short-term data like initial ETF inflows, they might overlook the long-term effects of this kind of product.

Bitcoin is currently trading at $42,525, rising by 1.1 percent over the past 24 hours, according to TradingView data. The cryptocurrency has surged by 156 percent this year, partially driven by expectations linked to a spot ETF.

Various market analysts have different views. Some suggest that the expected approval might cause an immediate and lasting price increase. Others view the approval as a “sell the news” event.