Global Hive Buzz

A spot ETF approval could lead to a significant correction in the value of Bitcoin.

Prominent figures are adopting a cautious stance as the prospect of Bitcoin exchange-traded funds (ETFs) approaches. In a blog post released on January 5, Arthur Hayes, the founder of BitMex, forecasted a potential 20-30% decline in Bitcoin's value in March following the hypothetical approval of a Bitcoin ETF, signaling the likelihood of a substantial correction in the broader crypto market.

Hayes' analysis highlights a potential setback influenced by the interplay of three pivotal factors: the Reverse Repo Program (RRP) balance, the Bank Term Funding Program (BTFP), and the Federal Reserve's rate cut.

The RRP functions as a short-term lending facility overseen by the Federal Reserve. Hayes anticipates the RRP balance dropping to $200 billion by early March. This potential decline, coupled with a scarcity of alternative liquidity sources, raises concerns about potential downturns in the bond market, stocks, and cryptocurrencies.

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The likelihood of Bitcoin ETF approval has surged to more than 90%, according to analysts at Bloomberg.

Bloomberg analysts now estimate the likelihood of a spot Bitcoin (BTC) exchange-traded fund (ETF) approval in the U.S. to be over 90%. In contrast, participants on the Polymarket betting platform have become more cautious, reducing the odds to 85%.

Despite this optimism, the betting market on Polymarket indicates a more skeptical view regarding approval before January 15. Participants have collectively wagered around $500,000 on the potential delay or even denial of approval, resulting in a decrease from last week's 90% probability.

Over a dozen applicants are vying to launch the first spot Bitcoin ETFs in the U.S. Recent amended 19b-4 filings, submitted on behalf of prominent entities like BlackRock, Grayscale, and Fidelity, have joined the amended S-1 filings from last month. These filings address feedback from the SEC, indicating ongoing efforts to meet regulatory requirements.

Issuers of spot Bitcoin ETFs receive their ultimate deadline to modify applications.

As reported by Bloomberg, potential issuers of Bitcoin ETFs had the opportunity to make amendments until the morning of Monday, January 8. The U.S. Securities and Exchange Commission (SEC) has until January 10 to take action on at least one of these submissions.

Insiders familiar with the situation anticipate that the regulator will use the information gathered to make multiple decisions. Additionally, the SEC plans to vote on 19b-4 filings from exchanges, which propose listing ETFs in the coming days. There is uncertainty about whether the SEC will take simultaneous action on S-1 filings, representing registration applications from potential issuers. If both sets of approvals are granted, ETFs could potentially commence trading on the next business day.

Notably, on August 31, 2023, the SEC extended its decision timeline for several Bitcoin funds until at least mid-October. Subsequently, in September 2023, the department further postponed the consideration of applications to January 2024.

There is considerable speculation within the cryptocurrency community about the SEC's anticipated decision this week regarding a spot Bitcoin ETF. Specifically, the SEC is expected to rule on the ARK 21Shares spot Bitcoin ETF application on January 10, with the deadline for applications from other asset managers, including investment giant BlackRock, following soon after.

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