What Happens After Bitcoin ETFs Get Approved?

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In a big move to kick off the year, Bitcoin has shot above $45,000, and experts like Michael Zarembski are discussing the potential reasons behind this surge. One key factor is the upcoming decision by the U.S. Securities and Exchange Commission (SEC) on a Spot Bitcoin Exchange-Traded Fund (ETF). The deadline for this decision is January 10th, and many investors are optimistic that the SEC might finally give the green light.

Michael Zarembski, the director of Futures and Forex at Charles Schwab, highlights that Bitcoin is starting 2024 on a strong note, continuing its positive trend from the previous year, when it gained 155%. The current rise of almost 10% at the beginning of the year fuels enthusiasm, with investors hoping for a favorable SEC decision on the Spot Bitcoin ETF.

The discussion revolves around believing that if the SEC approves the ETF, it could attract institutional investors on the sidelines, waiting for an easier way to enter the Bitcoin market. Reports suggest applications from companies like Ehh Ark and 21 shares are pending, with a decision expected by January 10th.

Zarembski points out that the potential approval of a Bitcoin ETF could lead to billions of dollars flowing into Bitcoin, contributing to the recent surge in its price. However, he also emphasizes the importance of being cautious, as the history of Bitcoin has shown significant volatility.

The broader market also shows a risk-on sentiment, with various asset classes experiencing positive movements. Zarembski notes that central bank activities, expected interest rate cuts, and upcoming events like the Bitcoin mining reward halving in April 2024 contributed to the overall market optimism.

While Bitcoin’s volatility has been a concern for some traders, the discussion touches on the possibility that increased institutional investment, facilitated by ETF approvals, could lead to a more stable and liquid market. The anticipation is that a more liquid market might lessen the extreme intraday moves that Bitcoin is known for.