Bitcoin ETF Liquidity Expected to Increase Following SEC Decision

The United States Securities and Exchange Commission (SEC) has approved applications from the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE) to list options for spot Bitcoin exchange-traded funds (ETFs). This decision, made on October 18, will enable options trading for the 11 approved Bitcoin ETF providers.

Trading firm QCP Capital suggests that this approval could lead to a significant increase in Bitcoin ETF liquidity. In a research note dated October 19, the firm stated that the consistent inflows into ETFs demonstrate strong institutional demand. They believe that the SEC's approval for Bitcoin ETF options to be listed on the NYSE will provide the necessary liquidity to attract sustainable inflows.

The impact of ETF inflows on Bitcoin's price has been notable. By February 15, ETFs accounted for approximately 75% of new investment in the cryptocurrency as it surpassed the $50,000 mark. This trend could potentially contribute to Bitcoin reaching a new all-time high.

Looking ahead to the 2024 US presidential elections, QCP Capital predicts an improvement in investor appetite for risk-on assets, including Bitcoin and other cryptocurrencies. They anticipate that risk-on sentiment will grow stronger as the election approaches, potentially driving risk assets higher.

In terms of market analysis, crypto analyst Rekt Capital suggests that Bitcoin needs to close the week above $68,700 to confirm a potential breakout from its current trading pattern. The analyst stated on October 18 that a weekly close at this level would be considered bullish.

Bitcoin ETFs have shown strong performance since their launch, surpassing the $20 billion milestone in total net flows on October 17, just 10 months after their introduction. For comparison, gold-based ETFs took nearly five years to reach the same $20 billion milestone.