The Impact of SEC Approval on Cryptocurrency Market
It has been a significant event in the cryptocurrency space since the U.S. Securities and Exchange Commission (SEC) gave the green light to Spot Bitcoin exchange-traded funds (ETFs). However, the aftermath of this approval has revealed a trend known as a “sell-the-news” phenomenon.
According to insights provided by South Korean data firm CryptoQuant, many cryptocurrency traders seized the opportunity presented by the ETF approval to capitalize on selling their holdings. The Spot Bitcoin ETF products were met with robust trading volumes during their launch, with Coinbase exchange also experiencing a surge in over-the-counter (OTC) desk transfer volumes.
Most Bitcoin ETFs are currently trading at a premium to spot Bitcoin, a dynamic highlighted by CryptoQuant. The firm’s analysis indicates that the approval of Bitcoin ETFs acted as a trigger for a sell-off event, resulting in a price decline of up to 15% since January 11, with Bitcoin prices dropping to as low as $41,500.
Despite Bitcoin’s current support level ranging between $41,000 and $43,000, there remains an air of uncertainty regarding a potential downtrend. While the cryptocurrency market faces selling pressure from short-term traders and large Bitcoin holders in a risk-averse environment, Bitcoin’s overall momentum remains positive, underpinned by various factors.
Strong Investor Interest in Spot Bitcoin ETFs
The approval of Spot Bitcoin ETFs has attracted significant attention, with a cumulative trading volume nearing $10 billion within just three days of their introduction. Reportedly, Grayscale’s GBTC emerged as a leading performer among the ETFs, registering an impressive three-day trading volume of $5.174 billion.
Bloomberg analyst James Seyffart highlighted the engagement levels of other prominent ETFs, including BlackRock’s IBIT and FBTC, with trading volumes of $1.997 billion and $1.479 billion, respectively, during the same period. Collectively, these three ETFs contributed to a substantial $9.771 billion in trading volume, indicating a strong investor appetite in the cryptocurrency sector.
The ongoing World Economic Forum (WEF) in Davos has become a hub for discussions on the future of business trends, drawing key figures in politics and business. Attendees from the crypto space are particularly optimistic this year, viewing the SEC’s ETF approval as a hallmark moment acknowledging the potential of cryptocurrency and blockchain technology.
“The recent ETF approval symbolizes a new era and the recognition of the potential of cryptocurrency and blockchain as a technology and as digital assets that can now be invested and supported more broadly by all types of investors,”
Sebastien Borget, COO and co-founder of The Sandbox
