ETF approval expected to quickly recover, Bitcoin price rises over 4% after "flash crash"

Zhitong App has learned that as investors regain confidence in the imminent approval of the first Bitcoin exchange-traded fund (ETF) by US regulatory agencies, the price of Bitcoin has once again turned upward in the roller coaster market at the beginning of the year, recovering some of the losses caused by Wednesday's lightning-fast plunge. Investors' confidence in the imminent approval of ETFs that directly hold this digital asset has quickly been restored, causing the price of Bitcoin to rise more than 4% on Thursday, after experiencing the largest single-day decline since November 2022 on Wednesday. With the deadline for the US Securities and Exchange Commission (SEC) to decide whether to approve a Bitcoin spot ETF approaching on January 10th, Bitcoin has risen more than 15% since early December.

On Wednesday, the price of Bitcoin, the world's largest cryptocurrency by market capitalization, plummeted by 9.2%, marking the largest single-day decline since November 2022. This was mainly due to a heavyweight report by Markus Thielen, an analyst at Matrixport, a cryptocurrency financial services provider, in which he predicted that the SEC would reject all applications for Bitcoin spot ETFs this month.

However, analysts from Bloomberg Intelligence subsequently predicted in a report that the likelihood of the SEC approving a Bitcoin ETF before January 10th is as high as 90%. According to media reports citing insider information, the Bitcoin spot ETF is "very close" to obtaining formal approval from the SEC, and it is expected that multiple companies' applications for issuing Bitcoin ETFs will be approved, with specific announcements expected to be made in the coming days.

On Thursday, the trading price of Bitcoin rose by more than 4%, approaching the $44,900 mark, before giving back some of the gains. Throughout 2023, Bitcoin has surged by nearly 160%, as people are increasingly optimistic that the formal approval of Bitcoin ETFs by the SEC will significantly boost the overall demand for Bitcoin.

Matthew Hougan, Chief Investment Officer of Bitwise Asset Management, said, "The market is very focused on the possibility of ETF approval, so even relatively minor news can trigger significant market volatility as leveraged positions are unwound. That's what happened on Wednesday, as the successful issuance of Bitcoin ETFs was reconsidered by the market, and today the market is rebounding." Bitwise Asset Management has stated that the company is applying to issue a Bitcoin ETF. The new wave of applications from potential Bitcoin ETF issuers such as ARK Invest and 21Shares has brought relief to cryptocurrency traders. ARK and 21Shares have submitted revised registration documents for their Bitcoin ETFs. However, some analysts warn that these amended documents do not necessarily mean that the Bitcoin ETF applications will be approved.

"The recent price trends are related to the expectation that Bitcoin ETFs will be approved and launched in the coming days," said Cosmo Jiang, portfolio manager at Pantera Capital, one of the oldest and largest funds in the industry. "We have many reasons to believe this, including changes in ETF filings."

In the summer of 2023, BlackRock Inc., the world's largest asset management company, initiated a new wave of applications for Bitcoin spot ETFs, followed by other heavyweight asset management institutions such as Fidelity. In August 2023, Grayscale Investments legally achieved victory, opening the door for the approval of Bitcoin ETFs.

In 2024, Bitcoin prices may reach a new all-time high

In 2024, the historical record of $69,000 for the highest Bitcoin price is likely to be broken. Some industry executives insist that a new bull market for Bitcoin has begun, based primarily on two major events: the Bitcoin halving and the highly likely approval of Bitcoin exchange-traded funds (Bitcoin spot ETFs) in the United States.

James Butterfill, Research Director at CoinShares, said that the prospect of cryptocurrency assets will undergo "significant changes" in 2024, driven by the possible approval of Bitcoin ETFs by the US government. "This long-awaited development will expand the investor base for cryptocurrency assets and integrate them more closely with traditional financial markets," Butterfill said in a media interview.

"There are forecast data showing that a 20% increase in investments (approximately $3 billion) from the assets managed by asset management institutions could push the price of Bitcoin to $80,000." At the same time, Butterfill added that the expectation of global central bank interest rate cuts may also "play a decisive role" in driving up the price of Bitcoin.

In November 2023, Standard Chartered Bank released a report stating that the $100,000 mark will be strongly driven by the approval of numerous ETFs. The bank also stated that the halving event will also support the trend of Bitcoin prices. As early as April, Standard Chartered Bank released a report predicting that Bitcoin is expected to reach $100,000 by the end of 2024. Matrixport, a self-proclaimed cryptocurrency financial services company, released a blockbuster report in November, predicting that Bitcoin will reach $63,140 by April 2024 and $125,000 by the end of that year.

"According to our inflation model, we expect a relaxed macro environment to continue to be a strong driving force for cryptocurrencies. We anticipate a further decrease in inflation rates, which may prompt the Federal Reserve to begin an interest rate cut cycle." "Coupled with geopolitical 'headwinds,' this healthy monetary support policy should propel Bitcoin to new highs in 2024," Matrixport stated in the report.