Investors have become more cautious as they await the decision of the US Securities and Exchange Commission (SEC) regarding the approval of a Bitcoin exchange-traded fund (ETF). The recent purge of leverage and the possibility of a delayed approval have influenced the mindset of investors, prompting a more careful approach.
“The purge of leverage and the growing possibility of a delayed approval, which has now influenced the mindset of some investors and traders, have led to a more cautious approach,” said Jacob Joseph, a research analyst at CCData.
This cautious sentiment has contributed to the subdued price action witnessed in the last 24 hours. Although it still appears likely that a spot Bitcoin ETF will receive approval in the coming days, any unexpected delay contrary to market expectations could result in a significant downturn for digital assets.
Application Filings and Approval Predictions
Several major asset managers, including BlackRock Inc. and Fidelity, have filed applications for ETFs tied to the digital asset. The SEC has until January 10 to approve or reject these applications. Bloomberg Intelligence analysts believe that a decision could be announced as early as January 8, with a 90% chance of approval for all applications.
Potential Rejection and Rumored Approval
On Wednesday, Bitcoin experienced a crash, dropping to as low as $40,000 after a report from Matrixport claimed that the SEC is likely to reject spot Bitcoin ETF applications this month. However, there have been recent rumors suggesting that approval could be imminent. Thursday afternoon, senior TechCrunch crypto reporter Jacquelyn Melinek stated that approval could happen within 24 hours.
With the SEC nearing the potential approval of the first Bitcoin ETF, issuers are competing to capture investor interest. Fidelity has set a highly competitive fee of 0.39%, while Invesco/Galaxy has announced a fee waiver for the first six months of operation and for the first $5 billion in assets held, followed by a 0.59% fee. Analyst Eric Balchunas of Bloomberg predicts that BlackRock will likely set its fee at 0.47%.
