Spot Bitcoin ETFs: Market Underestimation of Bullish Potential

Crypto market sentiment may be significantly underestimating the potential impact of a spot Bitcoin exchange-traded fund (ETF) approval, as highlighted by analysts at K33, formerly known as Arcane Research.

In their market report dated September 5th, K33’s senior analyst, Vetle Lunde, and vice president, Anders Helseth, pointed out that the last three months have seen a notable improvement in the prospects for a spot Bitcoin ETF approval. Surprisingly, this positive sentiment hasn’t been mirrored in the pricing of Bitcoin and other key cryptocurrencies.

The analysts delved into the dynamics, noting that despite Bitcoin struggling to maintain its gains following Grayscale’s legal victory against the Securities and Exchange Commission (SEC), the approval of a spot ETF would likely trigger substantial inflows and a surge in buying pressure for Bitcoin.

On the flip side, the analysts deemed the potential repercussions of a spot ETF rejection to be “negligible,” with Bitcoin’s price expected to remain relatively unaffected.

Lunde and Helseth emphasized that the crypto market’s perspective on ETFs is fundamentally flawed, given the growing likelihood of spot ETF approvals. In fact, several Bloomberg analysts are now predicting a 75% chance of approval within the year.

Lunde expressed his conviction, stating, “I firmly believe the market is wrong. This is, by all accounts, a buyer’s market, and it’s reckless not to aggressively accumulate BTC at current levels.”

To reinforce their bullish outlook, the analysts pointed to the recent 2% gain in the tech-heavy Nasdaq-100 index, which is often considered an indicator of the broader market’s risk appetite.

Shifting their focus to Ethereum (ETH), Lunde and Helseth expressed optimism about its performance in comparison to Bitcoin over the next two months. They anticipate that Ethereum will benefit from strong momentum leading up to the launch of a futures-based ETF.

Drawing a parallel to Bitcoin’s history, the analysts noted that Bitcoin gained approximately 60% in the weeks preceding the launch of the first Bitcoin futures-based ETF on October 19, 2021.

Looking ahead, a decision on a futures-based Ether ETF is anticipated in mid-October, with reports suggesting it is poised to receive approval from the SEC. This development could further enhance Ethereum’s prospects in the market.

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