Journalist
Aware:
- Experts believed there was a good chance that a spot Bitcoin ETF would be approved.
- The market was projected to experience increased volatility following approval.
The cryptocurrency market emerged from the low volatility regime in October, with several major assets posting their best results since May 2022, the official start of the bear market.
The beginning of the bull market?
The market rally pushed the world's largest crypto asset, Bitcoin [BTC]monthly earnings at 28.34%, according to a report by digital asset manager Galaxy. Additionally, the industry benchmark Bloomberg Galaxy Crypto Index (BGCI) rose more than 20%.
The jump was primarily based on optimism over possible approvals of Bitcoin spot ETF applications by the US Securities and Exchange Commission (SEC).
In fact, the drama began when unconfirmed news about the approval of one of the many applications caused BTC to skyrocket to almost $30,000.
While the news was debunked as expected, the volatility and surge led many experts to view the episode as a “dress rehearsal” before eventual approval. Since then, BTC has moved further north, trading at $36,830 at press time, per CoinMarketCap.
Sentiment has been shaped by positive predictions from experts and entities that follow the digital market. Bloomberg put the chances of approval at 90% by January 10, the first deadline for the first application.
What Bitcoin Spot ETF Approval Means for the Market
The Galaxy report outlined a list of likely scenarios for when applications will be approved in the future. Taking a cue from history, the market was projected to experience increased volatility afterwards.
Furthermore, given the legal relief, the chances of Grayscale Bitcoin Trust (GBTC) becoming a spot ETF were also high. However, the potential conversion could also create downward pressure.
This was because existing shareholders would divest their shares and BTC held in escrow would be released into the market to raise capital.
Furthermore, ETH has seen lower growth compared to Bitcoin, as evidenced by the low ETH/BTC ratio of 0.052. But things could change drastically as experienced investors could start leaning towards ETH after the approval of Bitcoin.
Read Bitcoin [BTC] Price prediction 2023-24
Although less publicized, ETH was also in the Spot ETF career.
Meanwhile, Bitcoin continued to ride the optimism. The number of bullish bets on the king coin continued to increase. Open interest (OI) also jumped to $7.2 billion, according to on-chain analyst firm Santiment.
🤑 #Bitcoinwhich has now risen +37% in 2 months, has seen its trader ratio open #bullish positions (vs. #bearish) reaching 3-month highs. Furthermore, total open interest on the exchanges has skyrocketed to $7.2 billion. Ideally, $BTC will continue to rise later #FOMO settles. https://t.co/YImIUMGRyl pic.twitter.com/4TyZe5YfFz
- Sentiment (@santimentfeed) November 8, 2023
