SEC approves spot Bitcoin ETFs

Crypto markets have been volatile this week, stirred mainly by anticipation of the approval of crypto spot exchange-traded funds (ETF). BlackRock and other institutions applied for a Bitcoin ETF by the Securities and Exchange Commission (SEC). BlackRock has also filed an ETH spot ETF for approval, boosting Ethereum prices.

A false SEC announcement on Wednesday triggered volatility in crypto markets. The SEC's social media account was hacked, releasing a fake announcement stating that a raft of ETFs had been approved. The announcement was removed minutes later, and the SEC issued a retraction, stating that its Twitter account had been compromised.

The first spot Bitcoin ETF approvals were granted on Thursday after many months of anticipation. News of the approval boosted Bitcoin price on Thursday, transferring to other cryptocurrencies as well. The SEC approved 11 applications, including those from BlackRock, Ark Investments, and Fidelity. The approval of the first spot Bitcoin ETFs is drawing investors’ attention and is likely to bring more institutional and retail money into crypto markets. Spot Bitcoin ETFs give access to the cryptocurrency to traders through a regulated product, eliminating the risks of buying from unregulated exchanges.

Bitcoin price spiked after the approval of the first spot Bitcoin ETFs on Thursday. Bitcoin skyrocketed to $48,800, its highest level since January 2022. If BTC price declines, support can be found near $43,100, while resistance may be near $49,000. 

Ethereum price also surged on Thursday, touching $2,690 for the first time since May 2022. If Ethereum's price declines, it may encounter support near $2,180, while if it increases, resistance may be encountered near $2,700.

Crypto markets are under pressure by rising geopolitical tensions. The war between Israel and Hamas is threatening to spill over the Middle East as tensions rise in the Red Sea area. Iran-backed Houthi militants have been attacking commercial vessels in the Red Sea. Concerns that the Geopolitical crisis in the Gaza area may spread to neighboring countries drive risk sentiment down putting pressure on risk assets. 

Increases in central banks’ interest rates are putting pressure on risk assets. Most major central banks, however, are hitting pause on rate hikes, propping up crypto markets. The Fed kept interest rates unchanged at its December meeting, within a target range of 5.25% to 5.50%. The Fed’s forward guidance was more dovish than expected, hinting that the central bank is preparing to pivot to a less restrictive monetary policy. Markets are currently pricing in a 25 bp rate cut in March with over 60% probability, propping up risk assets.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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