Week Ahead: Bitcoin ETF countdown begins

This week is extremely important due to the Bitcoin spot ETF approval deadline. This week will end investors’ years of waiting to get a Bitcoin ETF approved by the US Securities and Exchange Commission (SEC). As a result of this crucial event, it could bring in volatility like never before. 

Key events for this week

• Bitcoin ETF week: potential ETF approval by Wednesday or Thursday. 
• US inflation data release on Thursday. 

Read more: Bitcoin spot ETF approval could come as soon as Tuesday, new filings hint

US inflation data

On Thursday, the US Bureau of Labor Statistics will announce the inflation numbers for December. The headline inflation number was 3.1% for November, and forecasts currently sit at 3.2%, a slight increase. 

If the actual inflation number is equal to or lower than the previous one, it could reinforce bets of Fed rate cuts earlier this year. On the other hand, if the inflation rate meets expectations, i.e., it comes in hotter than expected, it would further add to the Fed’s hawkish stance. 

In such a case, the risk-on markets are likely to take a minor hit. 

Potential Bitcoin spot ETF launch 

The crypto market has been awaiting a potential Bitcoin spot ETF approval for years. Investors are excited this week as ETF approval is closer than ever before. With amended 19b-4 filings on January 5, the US SEC could announce its decision soon. 

Analysts are expecting this decision to come out late Wednesday or Thursday as the big day when the SEC finally gives the green light to that long-awaited Bitcoin spot ETF. 

Bloomberg’s Katie Greifeld noted that ETF issuers have until Monday at 8 AM ET to submit S-1s and that the SEC plans to vote on the 19b-4s and S-1s in the coming days. Greifeld added,

If both 19b-4s and S-1s are approved, ETFs could start trading as soon as the next day.

If it happens, all bets are off! Bitcoin price could blast off and potentially retest $50,000 or go higher. Additionally, the value of Bitcoin-related altcoins like Bitcoin Cash (BCH), Bitcoin SV (BSV), and Stacks (STX) could also increase.

Read more: Bitcoin Weekly Forecast: Analyzing possible short term implication of probable spot ETF approval on BTC price

Trading ETF news and hedging

Traders are likely to hedge their Bitcoin longs by shorting Ethereum or other altcoins. While some investors chase Bitcoin's skyward trajectory, others might see the ETF news as a signal to "sell the news" and exit their altcoin positions. This could trigger a temporary altcoin dip.

Read more: BlackRock might be on track to create history with $2 billion inflows in spot Bitcoin ETF in a week

(This story was corrected on January 8 at 10:40 GMT to say that US inflation data will be released by the US Bureau of Labor Statistics, not by the Federal Reserve. It was also corrected to say that markets expect US inflation to come in at 3.2%, not 3.3%.)

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