Bitcoin holds drop as traders mull likely reaction to spot ETFs

Bitcoin holds drop as traders mull likely reaction to spot ETFs

Bitcoin held a retreat as traders assessed how crypto markets might react if regulators meet expectations by approving the first US exchange-traded funds investing directly in the token. The largest digital asset shed 2.4% over the past 24 hours and traded at $42,400 as of 10:31 a.m. Wednesday in Singapore. Bitcoin is up 156% this year, a rally driven partly by wagers that the ETFs will encourage fresh demand.

One key issue is whether an actual green light for the products will spur some profit-taking, based on the adage that investors “buy the rumor and sell the news”. Put another way, the potential interest in the spot Bitcoin ETFs planned by the likes of BlackRock Inc. and Fidelity Investments remains unclear. The market is “almost certain” that the US Securities & Exchange Commission will give permission for spot Bitcoin ETFs before Jan. 10, Nic Carter, founding partner at Castle Island Management LLC, said on Bloomberg Television. The funds will widen the base of crypto investors in the medium term, he said, while flagging the possibility of a “news selling event” in the more immediate period.

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