Bitcoin Spot ETFs Anticipate Approval, Experts Say Liquidity Flow Crucial

By: Eva Baxter

Advanced technical discussions between the U.S. Securities and Exchange Commission (SEC) and key asset management firms concerning the approval of spot Bitcoin Exchange-Traded Funds (ETFs) suggest the regulator may soon approve the ETFs, with an increased focus on the specifics of the ETF framework, according to anonymous sources. Furthermore, 13 companies await decisions on their applications for ETFs to track Bitcoin prices including prominent names such as Grayscale Investments, BlackRock, Invesco, and ARK Invest.

A court decision in August has led to increased dialogues between the SEC and ETF issuers, marking the potential for future ETF approvals. Due to hesitations regarding investor protections, the SEC has historically been reluctant to approve such products. However, this has now shifted following the court decision which ruled against the SEC’s refusal to review previously rejected applications, resulting in increased optimism.

Approval of Bitcoin ETFs is expected to drive Bitcoin prices, and trading firm QCP Capital noted that a return to Bitcoin’s all-time high depends on the actual flows the ETFs will attract in the early trading weeks. They stressed that if liquidity flows into these ETFs fail to meet expectations, it could trigger a 'sell-the-news' scenario. Researchers at Galaxy Digital anticipate significant inflows in the first month, with estimates projecting $10 billion, marking positive sentiment for the cryptocurrencies' growth.