Oct 26, 2023 11:07 UTC
| Updated:
Oct 26, 2023 at 11:11 UTC
Bitcoin, the digital currency that has sparked countless debates, discussions, and headlines over the past decade, recently witnessed another significant price surge, pushing its value past the $35,000 mark. This recent uptrend wasn’t just another inexplicable rise; it was notably linked to the anticipation and subsequent developments surrounding a specific Bitcoin ETF. Here’s an in-depth analysis, pulling insights from various sources, that elucidates this surge:
BlackRock’s Involvement and the NASDAQ Listing shown on DTCC
Financial giant BlackRock announced its spot Bitcoin ETF, which was subsequently listed on NASDAQ. The participation of such a heavyweight in the financial world signals a growing institutional interest in the digital asset. Institutions typically bring in large capital inflows, which can significantly move the market. This listing not only broadened the accessibility of Bitcoin exposure to mainstream investors but also lent a touch of legitimacy to the cryptocurrency.
On October 23, Bloomberg ETF expert Eric Balchunas commented on an X (previously known as Twitter) thread, stating that the DTCC listing is a step forward in introducing a cryptocurrency ETF to the market. The prospective iShares spot Bitcoin ETF, denoted as IBTC, is eyed for a possible Nasdaq stock exchange listing, having made its application for listing and trading shares in June.
Balchunas highlighted that this is the inaugural spot ETF to be listed on DTCC, with no others currently listed there. He emphasized the significance of BlackRock’s proactive role in handling preliminary steps, such as seeding, ticker setup, and DTCC logistics, which usually precede a launch. He inferred from this that BlackRock might have received indications of an impending or definite approval.
He further mused that BlackRock could have either secured the SEC’s nod for the ETF listing or is making preparations on that assumption. As per BlackRock’s application timeline, the SEC has time until January 10, 2024, to finalize its stance on approving or rejecting the ETF.
As per recent updates and information is shows that this listing was there on DTCC from August 2023 but was highlighted on 24th October 2024 by Balchunas.
The ETF Excitement
ETFs or Exchange Traded Funds are investment funds that are traded on stock exchanges, similar to stocks. A Bitcoin ETF would allow investors to gain exposure to Bitcoin without the need to own the underlying asset directly. This means that traditional investors can invest in Bitcoin in a manner they are more familiar with, without dealing with the technicalities of owning and storing the digital currency.
The sudden spike in Bitcoin’s price, which briefly touched $35.2K as soon as the DTCC listing of IBTC i.e. name of Blackrock’s Bitcoin ETF.
The excitement stems from the belief that the launch of such ETFs would bridge the gap between the traditional finance world and the cryptocurrency ecosystem. The anticipation of higher liquidity, broader adoption, and the potential for more institutional investors to get involved often leads to bullish sentiments in the market.
Other financial institutions including GreyScale, ARK Invest,Valkyrie, Global X, WisdomTree, Invesco, Franklin Templeton, Hashdex, Bitwise and VanEck have also applied for Bitcoin ETF’s.
The DTCC Controversy
An article from DL News pointed out an interesting development where BlackRock’s Bitcoin ETF was momentarily pulled from the DTCC site. The DTCC or The Depository Trust & Clearing Corporation is a crucial player in the clearing and settlement of securities. Although the exact reasons for this temporary removal remain a subject of speculation, such events often generate buzz in the crypto community. While some may view it with skepticism, others might interpret it as an indication of the high demand and the need for better infrastructure to accommodate the new ETF.
What it means for Bitcoin and other CryptoCurrencies
The recent surge in Bitcoin’s price above $35,000 can be largely attributed to the combination of institutional interest, the perceived bridging of traditional and crypto finance through ETFs, and the buzz generated from market movements and speculations. As the cryptocurrency landscape continues to evolve, such pivotal moments reiterate the importance of staying updated with market developments and understanding the underlying factors driving price actions.
The surge of Bitcoin’s price to the $35,000 mark was also accompanied by a whirlwind of activity across the cryptocurrency market. Various significant developments and reactions were observed as the premier digital currency reached this price milestone. To paint a clearer picture, let’s dive deep into the events explained below:
BlackRock and the SEC
BlackRock, the world’s largest asset manager, was amidst settling charges of $2.5 million with the U.S. Securities and Exchange Commission (SEC). While this was ongoing, the cryptocurrency community eagerly awaited a decision on Bitcoin ETFs. BlackRock’s involvement in the space was seen as a positive sign, potentially paving the way for broader institutional acceptance.
Inflow into Bitcoin Funds
As Bitcoin continued its upward trajectory, funds related to the digital currency observed inflows of approximately $57 million. This was largely attributed to the growing excitement around potential Bitcoin ETFs. Such substantial inflows underscored the increasing interest and confidence from both retail and institutional investors in the market.
Germany and Canada were the primary contributors to these investments, with ETC Group from Germany garnering $24.3 million and Purpose Investments from Canada securing $10.9 million. Additionally, 21Shares AG amassed roughly $11.8 million. Concurrently, the U.S. Court of Appeals has instructed the SEC to re-evaluate the Bitcoin ETF application from Grayscale, intensifying the rivalry between leading companies aspiring to introduce a spot Bitcoin ETF.
CFTC’s Take on Spot Bitcoin ETFs
Further fueling the excitement around Bitcoin ETFs, a commissioner from the Commodity Futures Trading Commission (CFTC) expressed the sentiment that the market was ready for spot Bitcoin ETFs. These affirmations from regulatory bodies typically serve as strong indicators for potential favorable outcomes and future developments.
Crypto Market Sentiment
As Bitcoin approached its noteworthy price point, the overall sentiment in the crypto market soared. This enthusiasm wasn’t just confined to Bitcoin; it had a ripple effect, boosting optimism across various digital assets. Such highs in sentiment often drive more investors into the market, perpetuating a positive feedback loop.
The index for now is at 72 out of 100, placing it within a good greed ranking , which is a 6 pt. increase from Oct. 24 2023 and a 16 pt. bounce from its 50 pt. neutral score on Oct. 18 2023.
Liquidations Post the Surge
Bitcoin’s rapid ascent to $35,000 triggered significant market actions, particularly in the derivatives space. Over $221 million in liquidations were reported as the price climbed. Furthermore, approximately $300 million in crypto shorts were liquidated as Bitcoin jumped to its new mark as per Coinglass Liquidations data, with 74.6% of traders liquidated on the short side. These liquidations can accelerate price movements as traders are forced to exit their positions.
The meteoric rise of Bitcoin to $35,000 wasn’t a solitary event but rather the outcome of a confluence of factors, ranging from regulatory developments and institutional maneuvers to shifts in market sentiment and significant trading upheavals. Such episodes underline the multifaceted nature of the crypto market, reminding us that beneath every price movement lies a tapestry of interwoven events and narratives.
What will it mean for Bitcoin and Crypto Industry if the Bitcoin ETF is Approved
The research findings from Galaxy Digital, a major investment firm, on the potential market impacts if Bitcoin ETFs are approved shows that Bitcoin ETFs will draw $14 billion, pump bitcoin price by 74% based on the analysis of the link, here’s a unique and comprehensive understanding of the potential aftermath:
1. Potential Capital Inflows:
According to the research by Galaxy Digital, a Bitcoin ETF could trigger significant capital inflows into the crypto market. The researchers estimate an astounding potential inflow of up to $450 billion. Such capital influx would be an unprecedented event for the crypto industry, possibly leading to substantial price appreciation for Bitcoin and potentially other digital assets as well.
2. Bridging Traditional and Crypto Markets:
The approval of a Bitcoin ETF would signify a harmonization between the traditional financial ecosystem and the nascent cryptocurrency world. ETFs, being well-understood financial instruments traded on conventional stock exchanges, could act as gateways for traditional investors to access the crypto realm without needing to navigate the complexities of direct cryptocurrency ownership.
3. Enhanced Credibility and Legitimacy:
Regulatory approval for a Bitcoin ETF would serve as a tacit endorsement from authorities, imbuing the cryptocurrency space with enhanced credibility. Such regulatory green lights could lead to an even broader institutional and retail acceptance of cryptocurrencies, making them more mainstream.
4. Liquidity Boost:
With the advent of Bitcoin ETFs, there could be a noticeable increase in the liquidity of the Bitcoin market. Higher liquidity typically leads to reduced volatility and tighter bid-ask spreads, which can make the market more appealing and less risky for both institutional and retail participants.
5. Paving the Way for Other Crypto ETFs:
While Bitcoin is the flagship cryptocurrency, its ETF approval might set a precedent for other digital assets. This could lead to a cascade of applications and potential approvals for ETFs linked to other major cryptocurrencies, further expanding the integration of the crypto market into traditional financial systems.
6. Price Implications:
Although it’s speculative, the approval of a Bitcoin ETF, combined with the projected capital inflows, could act as a potent catalyst for Bitcoin’s price surge. While the market will inevitably factor in various other influences, such an institutional shift can provide substantial upward price pressure.
7. Increased Scrutiny and Regulation:
On the flip side, the integration of Bitcoin into the traditional financial ecosystem through ETFs could bring along increased regulatory scrutiny. Regulatory bodies might introduce new guidelines or tighten existing ones to ensure investor protection and market stability.
To Summarise
The experts projected that a spot bitcoin ETF could attract $14 billion in investments during its inaugural year, increasing to $27 billion in the second year, and reaching $39 billion in the third year. Furthermore, they anticipated a 74% surge in the bitcoin price in the year following its endorsement.
The potential approval of a Bitcoin ETF stands as a watershed moment for the cryptocurrency industry. Beyond just the immediate financial implications, it represents a confluence of the evolving perspectives on digital assets, regulatory stances, and market maturity. While the precise future remains uncertain, such a move would undeniably be a monumental step in the crypto narrative.
Raghav Sawhney
Raghav is a significant contributer who uses his knowledge, skills and experience towards development & growth of the organisation in an efficient and effective manner.
