Bitcoin ETF potential approval could come close to BTC halving
- The final deadline for approval of most Bitcoin ETF applications is a few weeks ahead of BTC’s fourth halving event.
- Crypto broker Bernstein predicted an influx of new capital to power a cycle that comes from fresh stablecoin supply, tokenization of traditional assets and ETFs.
- The SEC extended its review of Ark 21Shares Bitcoin ETF as of Friday, and continues to assess BlackRock and Fidelity Investments’ applications.
Crypto Exchange Traded Funds (ETFs) will create demand for the asset in the spot market, according to Bernstein Research, as reported by CoinDesk. This fuels inflows from retail and institutions, and a Bitcoin ETF approval is likely to mark the beginning of a new cycle in crypto.
The final deadline for approvals on most applications is close to Bitcoin’s fourth halving, slated to occur in April 2024.
Bitcoin ETF approval new timeline pushes decisions closer to BTC halving
Bitcoin halvings have been considered key events, marking the beginning of new cycles in the asset in the past three occurrences. However, analysts at Bernstein Research said in a report cited by CoinDesk that the approval of a Bitcoin ETF by the Securities and Exchange Commission (SEC) has the potential to power a new crypto cycle for the asset.
The team of analysts led by Gautam Chhugani believe that the interest of leading global asset managers in BTC spot ETFs and potential mechanisms to address the SEC’s objections have increased the probability of an approval.
The research team expects a spot Bitcoin ETF market to reach 10% of BTC’s market capitalization within two to three years. At the time of writing, Bitcoin’s market capitalization is $570.9 billion, according to CoinGecko.
A new crypto cycle is typically marked by a fresh inflow of funds from retail investors and institutional traders and a significant increase in an asset’s market capitalization. Bernstein expects these changes in Bitcoin and believes they are likely to follow once a spot Bitcoin ETF is approved by the US financial regulator.
The timing is key, given how deadlines are set a few months ahead and weeks before of the fourth BTC halving.
Deadlines for spot Bitcoin ETF approvals
The SEC extended its review of Ark 21Shares application on Friday, with looming deadlines for VanEck, Fidelity Investments and Valkyrie.
How a spot Bitcoin ETF approval can start a new crypto cycle
Bernstein said that capital needed to kickstart a new crypto cycle would come from fresh stablecoin supply, tokenization of traditional assets, native crypto infrastructure tokenization and ETFs. As of 2023, on-chain assets have been stuck in a $40 billion range and stablecoins in circulation are around $120 billion.
Crypto analyst @CryptoJelleNL believes that a delay in approvals is likely, but an altogether rejection seems most unlikely in the current scenario.
The SEC delayed a decision on ArkInvest's #Bitcoin Spot ETF last Friday.
— Jelle (@CryptoJelleNL) August 14, 2023
The next (7) deadlines are all in the first week of September -- where the SEC has to comment on ETFs by BlackRock, VanEck, Fidelity & Valkyrie, among others.
What do you expect? pic.twitter.com/WUag17nXOJ
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
