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Bitcoin has sprinted to a more than 6% gain over the first three days of January, bucking a dour start to the year in global markets. The largest digital asset traded above $45,300 on Wednesday in London, buoyed by expectations that the US will soon allow the country’s first spot Bitcoin exchange-traded funds. General crypto optimism also encouraged advances in smaller coins such as Solana and Avalanche.
In contrast, US equity futures struggled for traction after a drop in American stocks, the first trading day of 2024 in traditional markets. A dollar index held an advance in a further sign of investor caution. Bloomberg Intelligence analyst James Seyffart is among those expecting the Securities & Exchange Commission to approve a batch of spot Bitcoin ETF applications by a January 10 deadline. The token is up 172% in the past 12 months on bets that the products will help bolster Bitcoin demand.
The question now is whether the actual green light will become a reason for speculators to bank some profits given that it remains uncertain whether the ETFs will succeed in making Bitcoin more of a mainstream asset. “We don’t expect mega immediate inflows to the ETFs; hence, it might become categorised as a ‘sell-the-news’ event,” K33 Research analysts Anders Helseth and Vetle Lunde wrote in a note. But they added that the products herald a longer-term structural shift in buyer interest.
K33 estimated there’s still a 5% chance that the SEC “pulls a shocker” and rejects the efforts to launch ETFs that invest directly in Bitcoin. It assigned 75% odds to approval being a “sell-the-news” event, and 20% odds to a further increase in Bitcoin prices due to ETF inflows. Digital assets have also benefited from wagers that the Federal Reserve will cut interest rates in 2024.