There is a lot of anticipation in the cryptocurrency market as the US Securities and Exchange Commission (SEC) is close to its decision to approve spot Bitcoin ETFs (exchange traded funds). This excitement is quantifiable as investors on the decentralized prediction platform Polymarket are betting on this outcome.
The probability of approval by January 15, 2024 is 88%, as evidenced by the trading price of the “Yes” shares of the contract in question.
88% chances of being approved as a spot Bitcoin ETF
The 88% probability represents a significant increase from the 50% probability estimated just a month ago. The growing optimism is not unfounded. A recent report revealed that the SEC was ready to inform the 14 spot Bitcoin ETF applicants of their approval status.
This news caused a stir in the crypto market and the value of Bitcoin has increased by over 55% since the beginning of October. Bitcoin’s recent rise above $45,000, a first since April 2022, highlights the market’s reaction to these developments. Additionally, the recent price movement resulted in significant short position liquidation of over $133 million, CoinGlass reported.
Read more: Analysts explain why BTC price will hit $1 million after Bitcoin ETF approval
At Polymarket, a major player in the prediction market since its inception in 2020, over $526,623 has been wagered on this particular ETF prediction. The platform allows investors to bet on various events, reflecting market sentiment. The current betting trend suggests a strong belief in the SEC’s imminent approval.
Bitcoin ETF approval. Source: Polymarket
The potential approval of a spot Bitcoin ETF is significant for several reasons. First, it would open the cryptocurrency market to a wider range of investors and attract billions of dollars in new investments. Additionally, a spot ETF would be valued directly based on the real-time price of Bitcoin, providing a more direct investment opportunity.
This structure could lead to greater exposure and liquidity in the cryptocurrency market.
“Medium term [Bitcoin ETFs] “It should provide a smooth path for institutions to add Bitcoin to their books in a way that is both regulatory friendly and compatible with various fund structures,” Mati Greenspan, CEO of Quantum Economics, told BeInCrypto.
Furthermore, the approval of such ETFs would represent a major step towards the general adoption of cryptocurrencies in the US. It connects traditional financial markets and the often volatile crypto market.
By trading on regulated platforms such as the New York Stock Exchange and Nasdaq, these ETFs offer a safe and regulated way to invest in Bitcoin.
“Think about the magnitude of this. “If $100 billion flows into Bitcoin, the guys at Fidelity think that could have a valuation multiple of 11x, so you could see Bitcoin go from a $600 billion asset to a $6 trillion asset will,” Anthony Scaramucci, CEO of SkyBridge Capital, said.
However, this optimism is not without risks. Some traders hedge their bets by purchasing “no” stocks under the Polymarket contract. In fact, they are preparing for a possible price drop if the SEC delays or denies approvals for Bitcoin ETFs.
“The likelihood that the ETF approval will be a sell-the-news event is increasing as Bitcoin market participants sit on large unrealized profits. For example, short-term Bitcoin holders are seeing high unrealized profit margins of 30%, which has historically preceded price corrections,” CryptoQuant analysts argued.
This cautious approach is evidence of the volatility of the market and the high risks involved in regulatory decisions.
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