Spot Bitcoin ETF Approval: Market Underestimation
Analysts at K33, formerly Arcane Research, have made a compelling case for the crypto market’s underestimation of the potential impact of a spot Bitcoin (BTC) exchange-traded fund (ETF) approval. Despite recent developments, the market sentiment does not fully capture this possibility’s bullishness.
Improved Prospects for Spot Bitcoin ETF
K33’s Senior Analyst, Vetle Lunde, and Vice President, Anders Helseth, pointed out that the past three months have significantly enhanced the chances of a spot Bitcoin ETF receiving approval. This positive outlook contrasts with the market’s subdued response, not just in Bitcoin’s price but also among other major cryptocurrencies.
Enormous Inflows and Buying Pressure
The analysts highlighted that despite a retracement in Bitcoin’s price following Grayscale’s legal victory against the Securities and Exchange Commission (SEC), a spot ETF approval could trigger massive capital inflows. This surge in demand could substantially increase buying pressure for Bitcoin.
Limited Downside Risk
Interestingly, Lunde and Helseth noted that the downside risk associated with a potential spot ETF rejection is “negligible.” In such a scenario, Bitcoin prices are expected to maintain their regular trading patterns, implying that the market might be overly cautious in assessing the situation.
Reassessing the Market’s View on ETFs
K33 analysts challenged the market’s prevailing sentiment regarding ETFs, especially considering the growing likelihood of spot ETF approvals. They cited Bloomberg analysts who now predict a 75% chance of support within the year, emphasizing that the market’s perception may need recalibration.
“A Buyer’s Market” for Bitcoin
Lunde expressed his firm conviction that the market is currently misjudging the situation. He emphasized, “This is, by all accounts, a buyer’s market, and it’s reckless not to accumulate BTC at current levels aggressively.”
Ether’s Potential Outperformance
In addition to their insights on Bitcoin, Lunde and Helseth have shared their optimism about Ether (ETH). They anticipate that ETH will outperform Bitcoin over the next two months. This expectation stems from solid momentum leading up to the anticipated launch of a futures-based ETF for Ethereum.
Drawing Parallels to Bitcoin’s History
The analysts drew parallels to Bitcoin’s historical performance, noting that Bitcoin experienced approximately a 60% gain in the weeks leading up to the launch of the first Bitcoin futures-based ETF on October 19, 2021.
The Upcoming Verdict for Ether ETF
Lunde and Helseth revealed that the verdict on a futures-based Ether ETF is expected in mid-October and appears to be on track to receive approval from the SEC. This development adds to the growing optimism surrounding cryptocurrency ETFs.