27-12-2023 (NEW YORK) Bitcoin experienced a pullback as traders weighed the potential impact on crypto markets in the event that regulators approve the first US exchange-traded funds (ETFs) directly investing in the digital token.
Over the past 24 hours, the largest digital asset dropped by 2.4%, settling at US$42,400 as of 10:31 am Wednesday in Singapore. Despite this decline, Bitcoin has seen a remarkable 156% surge this year, driven in part by expectations that ETF approvals will stimulate fresh demand.
A significant concern among traders is the possibility of profit-taking occurring once the green light is given for these products, adhering to the market adage of “buy the rumour and sell the news.” The actual level of interest in spot Bitcoin ETFs, anticipated from major players such as BlackRock Inc and Fidelity Investments, remains uncertain.
Nic Carter, founding partner at Castle Island Management LLC, expressed confidence that the US Securities & Exchange Commission will likely grant permission for spot Bitcoin ETFs before January 10. While he believes these funds will broaden the base of crypto investors in the medium term, he also cautioned about a potential “news selling event” in the immediate period following approval.
In the past 24 hours, smaller tokens like Avalanche and Solana witnessed more substantial losses compared to Bitcoin. Meme-crowd favourites like Dogwifhat also experienced a decline. Surprisingly, BNB, the coin associated with the Binance exchange, defied the broader selloff, registering a 10% climb.
Bitcoin’s impressive rally this year has been fueled not only by prospects of US interest rates decreasing but also by the anticipation surrounding ETF approvals. This surge has helped recover some of the losses from the significant crash in 2022 that had a ripple effect throughout the crypto industry. However, Bitcoin is still trading below its record of nearly $69,000 from the Covid-19 pandemic era.
