Bitcoin reaches $36,000 amid anticipation of SEC approval for spot bitcoin ETFs, with analysts predicting a 90% chance of approval by January 10
Bitcoin's price has been on a steady rise, pushing towards $36,000, in anticipation of the Securities and Exchange Commission's (SEC) approval of 12 spot Bitcoin ETF applications. This is the first approval window after Grayscale's court victory to convert its Grayscale Bitcoin Trust into a spot ETF. Analysts are optimistic, predicting a 90% chance that at least one spot bitcoin ETF gets approved by January 10.
Bitcoin prices surged to nearly $37,000, crossing the $36,000 mark for the first time since May 2022. This rally was driven by a "short squeeze" during early Asian trading hours, resulting in over $50 million in liquidations. The surge in prices coincided with reports of the SEC beginning talks with Grayscale, which could lead to the conversion of their Bitcoin Trust into a spot ETF.
Bitcoin's gains this year have been attributed to the expected approval of a bitcoin exchange-traded fund (ETF). However, Matt Hougan, Bitwise Asset Management's Chief Investment Officer, believes that an ETF is not yet priced in. He argues that the majority of advisors who are the natural audience for this ETF don't expect it to come until 2025 or later. ETFs will play a significant role in opening up cryptocurrency investments to a broader range of investors. Currently, only 20% of self-directed retail investors have bought crypto, while 80% of the wealth in America is controlled by financial advisors and institutions who need an ETF to access crypto.
Bitcoin's 25-delta one-month call-put skew, a gauge used by options traders to predict the direction of bitcoin, is exhibiting the strongest bullish bias in 31 months. This indicates that demand for bullish bets is outpacing puts, offering downside protection. The rise in spot ETF optimism has driven BTC above $36,800, causing investors to stop selling calls above the cryptocurrency's spot price. Speculators are buying call options for leveraged upside exposure. Longer duration call-put skews also show a bias for continued BTC strength over two, three, and six months.
The anticipation of the SEC's approval of a Bitcoin spot ETF has created a bullish trend in the market. This optimism, coupled with factors like the 'short squeeze' and the potential conversion of Grayscale's Bitcoin Trust into a spot ETF, has driven Bitcoin's price upwards. The approval of a Bitcoin ETF could open up cryptocurrency investments to a broader range of investors, potentially driving the price even higher.