The buzz surrounding Bitcoin ETFs actually began in 2013, with the Winklevoss brothers being the first to apply to the regulator for the launch of a Bitcoin ETF. Unfortunately, their application was rejected, and countless other companies met the same fate over the years. Almost 30 different applications were submitted, all of which faced rejection by the regulators until mid-2023.
It wasn’t until last summer that several companies finally filed applications with the US Securities and Exchange Commission (SEC) to launch spot Bitcoin ETFs. However, the regulator demanded adjustments to be made to the applications before granting approval. On January 10, 2024, a historic event occurred for the entire crypto market – the approval of the listing and trading of shares of investment funds on Bitcoin.
Furthermore, the SEC approved the Exchange-Traded Product (ETP) which includes the Exchange-Traded Fund (ETF). Trusts were then introduced, allowing clients to invest in Bitcoin by purchasing shares of the trust funds themselves, rather than acquiring BTC directly. It was a significant step towards legitimizing Bitcoin as a recognized investment asset class.
However, contrary to expectations, no miracle occurred
Although the launching of ETFs is a significant milestone for Bitcoin’s recognition as a legitimate investment, the market volatility turned out to be much lower than anticipated by experts and community members alike. Bitcoin failed to reach new historical highs, and just two weeks after the ETP’s approval, it experienced a significant price drop of more than 20%. Several factors may have played a role in this situation:
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Growth based on expectations: Over the past year, Bitcoin’s price gradually increased in anticipation of ETF approval. In January 2023, BTC was valued at around $22,000, and by last week, it reached $44,000, effectively doubling its value in a year. One possible explanation as to why the market seemingly overlooked the launch of ETFs is that the approval was already factored into Bitcoin’s price.
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False start: The price of Bitcoin unexpectedly surged over 15% within minutes due to a fake SEC tweet falsely claiming the approval of spot Bitcoin ETFs. The price briefly soared to approximately $48,000 but plummeted to below $45,000 less than half an hour later. This premature event likely affected the community’s expectations and subsequent price dynamics of the first cryptocurrency.
Analysts also cite other reasons for Bitcoin’s recent decline, such as a significant transfer of 11,739 bitcoins to the Coinbase crypto exchange, which caused the price to drop below $42,000. Additionally, concerning dynamics regarding leverage in derivatives and profit-taking by certain traders might have contributed to the muted market reaction.
What’s on the horizon?
Despite the current situation, some analysts remain optimistic about the future. On the first day of trading, the transaction volume of spot Bitcoin ETFs exceeded the daily turnover of the 500 largest ETFs launched last year for other assets.
By the fourth day, the total volume of Bitcoin ETFs surpassed $11.1 billion. The Head of Derivatives at Bitfinex even stated that Bitcoin ETFs have become the second-largest class of commodity exchange-traded funds in the United States in terms of assets under management.
Nevertheless, there are still skeptics who anticipate further price drops for BTC. These skeptics include Peter Schiff, one of the main critics of the first cryptocurrency, and Kiarash Hosseinpour, the founder of Colorways Ventures and The Consensus. The latter predicts strong downward pressure on Bitcoin’s market value from January to June due to the potential sale of assets by major holders of the first cryptocurrency.
Always be prepared
The volatility of Bitcoin in January once again emphasized the importance of timely preparation when it comes to selling coins. There may not be sufficient time to transfer coins between platforms. Before transferring bitcoins for long-term storage, ensure that you will not acquire “dirty” BTC. To achieve this, you can utilize Mixer.money to clean your coins.
When utilizing complete anonymity mode after the process of mixing, the user can obtain clean coins from exchanges with a daily turnover exceeding 1,000,000 BTC. These bitcoins won’t be traced as having undergone the mixing process by analytical software, allowing for easy selling on exchanges with Know Your Customer (KYC) without the risk of account blocking. The mixer can be accessed through the official website, the TOR mirror, or the official Mixer.money bot on Telegram. Coin clearance typically takes up to six hours, and the maximum service commission is 5% via the website and 4.5% via the bot, plus 0.0007 BTC.
Following the approval of Bitcoin ETFs, the market now turns its attention to the next significant event – the halving, which is set to occur in three months. During this time, BTC owners can prepare their coins for a quick and hassle-free sale in light of the impending reduction in mining block rewards.