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US Bitcoin ETF Approvals – A Game Changer for the Industry?

In a widely publicized decision, the S.E.C. authorized 11 funds to begin trading on Jan. 11. With the approval of the first spot bitcoin ETFs in the U.S., investors worldwide are closely monitoring the potential implications on the broader asset class over the short and the medium to long-term.

Buy the rumour – sell the fact?

Bitcoin led a significant rally in cryptocurrencies over the course of 2023 with a 160% price gain. After a scandal-ridden year of 2022 which saw the demise of 3AC, Celsius, FTX, the ink was not dry on the obituaries as bitcoin staged an impressive comeback. A big driver of the price resurgence was the anticipation of an SEC approval for the first spot bitcoin ETFs in the U.S.. When BlackRock filed for a bitcoin ETF on June 15, 2023, bitcoin jumped by approximately 22% within one week. When it became clear that the S.E.C. would not appeal the ruling of the Court of Appeals on Oct. 23, bitcoin once again surged by 15% within two days. While other factors such as the decrease in U.S. yields in Q4 and a recognition of macro tailwinds contributed to the year-end rally, the main catalyst was indeed the spot ETF. The fixation of the asset class around this binary event was always going to come with some risks. A subsequent lack of narrative would – according to the naysayers - lead to a classic buy-the-rumor-sell-the-fact situation. An entire asset class clinging on to a binary event was the proof that crypto still had a long way to go to become mainstream

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