XTB analyst sees Bitcoin surging ahead of SEC’s spot BTC ETF decision

Rick Steves

The SEC has set January 10 as the critical date for approving or rejecting an ETF directly investing in Bitcoin. While market expectations for substantial inflows into the crypto asset class are high upon potential ETF approval, caution is advised.

Global stock markets are gearing up for a potential year-end surge, often referred to as a ‘Santa rally,’ as traders and investors resume activity post-Christmas, said Walid Koudmani, MSTA, the Chief Market Analyst at XTB. The optimism stems from expectations of central banks initiating interest rate reductions in 2024, with the anticipation of multiple cuts next year.

XTB’s Koudmani also noted that, in the crypto space, institutional investors are actively channeling capital into Bitcoin as the deadline for the U.S. Securities and Exchange Commission (SEC) to approve a spot BTC exchange-traded fund (ETF) approaches.

‘Soft landing’ behind S&P 500 strength

Following gains in the US stock market, the S&P 500 index reached its highest intraday level in nearly two years. The rally, positioning the S&P 500 just below 1% of its all-time high recorded in January 2022, reflects growing confidence in US policymakers’ ability to engineer a ‘soft landing’ that curbs inflation without causing a recession.

However, the situation in the UK presents a contrasting picture, with data indicating ongoing inflationary and economic challenges. The Bank of England faces a complex landscape, and concerns arise as it navigates through these issues, potentially impacting the market trajectory.

Crypto ETFs await SEC decision

The MacroMicro Bitcoin Futures Smart Money Index reveals a noticeable uptick, tracking the spread between large investors’ long and short positions on the Chicago Mercantile Exchange. This surge is fueled by the anticipation of the SEC’s decision and the growing expectation of a Federal Reserve rate cut in 2024.

The SEC has set January 10 as the critical date for approving or rejecting an ETF directly investing in Bitcoin. While market expectations for substantial inflows into the crypto asset class are high upon potential ETF approval, caution is advised.

There is a possibility that the actual demand for the BTC Spot ETF may initially fall short, potentially leading to a ‘sell the news’ scenario in January. Economic uncertainty further compounds the scenario, making many market participants adopt a cautious stance. The beginning of 2024 is likely to be defined by the unfolding ETF approval and major central banks’ interest rate decisions, introducing significant variables into market performance.

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