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Investors Forecast 88% Probability to SEC Approving Spot Bitcoin ETF

3 mins
Updated by Bary Rahma
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In Brief

  • The SEC is close to deciding on spot Bitcoin ETFs, with Polymarket bets indicating an 88% chance of approval.
  • BTC's price surged past $45,000 in response to optimistic sentiments regarding the Bitcoin ETFs' approval.
  • Approval could significantly open up the crypto market, but some traders hedge against a potential price drop.
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The cryptocurrency market is buzzing with anticipation as the US Securities and Exchange Commission (SEC) nears its decision to approve spot Bitcoin ETFs (exchange-traded funds). This excitement is quantifiable, with investors on the decentralized prediction platform Polymarket betting on this outcome.

The odds stand at an 88% probability of approval by January 15, 2024, as evidenced by the trading price of the “Yes” shares of the relevant contract.

88% Chances of Spot Bitcoin ETF Approval

The 88% probability marks a significant increase from the 50% chance estimated just a month ago. The growing optimism is not without foundation. A recent report revealed the SEC was poised to notify the 14 applicants of spot Bitcoin ETFs about their approval status.

This news has sent waves through the crypto market, with Bitcoin’s value soaring over 55% since early October. Bitcoin’s recent surge past $45,000, a first since April 2022, underscores the market’s response to these developments. Additionally, the recent price action led to a substantial liquidation of short positions, amounting to over $133 million, as reported by CoinGlass.

Read more: Analysts Explain Why BTC Price Will Hit $1 Million After Bitcoin ETF Approval

Polymarket, a major player in the prediction market since its inception in 2020, has seen over $526,623 wagered on this specific ETF prediction. The platform allows investors to bet on various events, reflecting the market’s sentiment. The current betting trend suggests a strong belief in the SEC’s imminent approval.

Bitcoin ETF Approval.
Bitcoin ETF Approval. Source: Polymarket

The potential approval of a spot Bitcoin ETF is significant for several reasons. Firstly, it would open the cryptocurrency market to a broader range of investors, drawing billions in new investments. Also, a spot ETF would be valued directly off the real-time price of Bitcoin, offering a more direct investment opportunity.

This structure could lead to greater exposure and liquidity in the cryptocurrency market.

“In the mid-term, [Bitcoin ETFs] should provide a frictionless on-ramp for institutions to add Bitcoin to their books in a way that’s both regulatory friendly and compliant with various fund structures,” Mati Greenspan, CEO of Quantum Economics, told BeInCrypto.

Additionally, the approval of such ETFs would signify a major step towards mainstream cryptocurrency adoption in the US. It bridges traditional financial markets and the often volatile crypto market.

By trading on regulated platforms like the New York Stock Exchange and Nasdaq, these ETFs offer a secure and regulated avenue for investing in Bitcoin.

“Think of the magnitude of that. If there’s a hundred billion dollars that flows into Bitcoin, the guys at Fidelity think that could have an 11 times factor in terms of valuation, so you could see Bitcoin go from a $600 billion asset to a $6 trillion asset,” Anthony Scaramucci, CEO of SkyBridge Capital, said.

Still, this optimism is not without its risks. Some traders hedge their bets by purchasing “No” shares on the Polymarket contract. Indeed, they are preparing for a potential price drop if the SEC delays or denies the Bitcoin ETF approvals.

“There are increasing odds that the ETF approval will be a ‘Sell-the-News’ event as Bitcoin market participants are sitting on high unrealized profits. For example, short-term Bitcoin holders are experiencing high unrealized profit margins of 30%, which historically has preceded price corrections,” analysts at CryptoQuant argued.

This cautious approach is a testament to the market’s volatility and the high stakes in regulatory decisions.

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Bary Rahma
Bary Rahma is a senior journalist at BeInCrypto, where she covers a broad spectrum of topics including crypto exchange-traded funds (ETFs), artificial intelligence (AI), tokenization of real-world assets (RWA), and the altcoin market. Prior to this, she was a content writer for Binance, producing in-depth research reports on cryptocurrency trends, market analysis, decentralized finance (DeFi), digital asset regulations, blockchain, initial coin offerings (ICOs), and tokenomics. Bary also...