Is the approval or rejection of a Bitcoin ETF really significant? According to venture partner Adam Cochran, the short-term impact is minimal.
With the deadline for the approval or rejection of the Bitcoin ETF prediction approaching, the price volatility of Bitcoin has reached a new high in nearly two years, and there has also been a significant increase in on-chain activity in whale wallets. But is the approval or rejection of the Bitcoin ETF really important? Venture partner Adam Cochran believes that the short-term impact may not be significant.
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The market has long been eager
Bitcoin price volatility soars
Continued growth in whale activity
Bloomberg ETF analyst: Gensler has no reason to reject
Adam Cochran: Bitcoin ETF will have long-term impact
More Bitcoin ETF reports
With the US Securities and Exchange Commission (SEC) soon to approve or reject the Bitcoin spot ETF, the crypto community has noticed the significant volatility in the cryptocurrency market recently, and has also observed a continuous increase in on-chain activity by whales, which has historically been a precursor to intense market volatility.
According to analysts at Bitfinex, the recent surge in implied volatility of Bitcoin indicates that derivative traders are preparing for unprecedented price volatility in Bitcoin.
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The Block Data: Implied Volatility of Bitcoin
The analysts revealed that the signals from the options market in recent weeks indicate that derivative traders’ expectations for Bitcoin price volatility have reached the highest level for 2023, especially after setting a record-high options trading volume in December.
Another finding comes from the observation by crypto market intelligence platform Santiment, which indicates that the recent trading volume of whales has reached the highest level since June 2022.
(Note: Whales are defined here as addresses with active trading volumes exceeding $100,000 or $1 million)
The company stated that with the surge in whale trading volume, the market may experience some volatility, which often signals a breakout period for prices.
With multiple asset management companies that have filed Bitcoin ETF applications expected to make their final revisions to their documents by this morning (January 8).
Eric Balchunas, a senior ETF analyst at Bloomberg who remains bullish, believes that the voting phase that SEC commissioners may take next is imminent, and that its chairman Gary Gensler will have no reason to reject it:
It’s hard to imagine Gary voting against it if it goes to a vote. On one hand, he lacks substantial reasons to reject it, and on the other hand, he has already had extensive interactions and negotiations with 11 Bitcoin ETF issuers through SEC staff, indicating Gensler’s open attitude towards its development.
Eric further added that Gensler recently told SEC staff that he hopes the aforementioned negotiations and comments can be released on January 11.
However, he also reminded that there are no meetings scheduled by the agency before January 11 in the SEC’s public agenda, but it can still issue decisions through the same “delegated authority policy” as before, by designated personnel.
Venture partner Adam Cochran believes that most people are too focused on the short-term price impact of the Bitcoin ETF and overlook its potential long-term impact.
Imagine that within the next year, investment advisors will recommend their clients to invest a small portion (e.g. 1%) of their funds in the Bitcoin ETF, especially considering the high return on investment of Bitcoin in the second half of 2023.
He also emphasized that the product structure of the spot ETF will help improve the health of the market and encourage long-term holdings, which will reduce extreme volatility:
The pace of this growth will be slow enough to make you doubt it, until you turn around and see that the price of Bitcoin has risen to $500,000, and you are still waiting for a significant pullback.
Bitcoin ETF will bring market manipulation and fraud risks to more investors
US non-profit organization criticizes Bitcoin spot ETF again: worthless gambling chips
BlackRock expects Bitcoin spot ETF to be approved on January 10, with $2 billion funds ready
Adam Cochran
Eric Balchunas
Gary Gensler
SEC
Bitcoin spot ETF
Further reading
Global ranking of Bitcoin ETF popularity, Luxembourg and Singapore top the list, China and the US fall behind
US non-profit organization criticizes Bitcoin spot ETF again: worthless gambling chips
