Bitcoin Spot ETF approval may fail to catalyze BTC price rally for these reasons
- Bitcoin Spot ETF’s likely approval next Tuesday failed to stir volatility in futures markets.
- Options data for January 12 has a strong correlation with Bitcoin Spot ETF.
- Options Implied Volatility fell rather than rising and the block was almost untraded.
While there is news of a Reuter’s report that the US financial regulator could approve a Spot Bitcoin ETF as early as next Tuesday, it failed to stir excitement in futures markets.
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Bitcoin futures traders likely not enthusiastic about Spot ETF approval
Bitcoin Spot ETF approval is widely considered a catalyst for BTC price by market participants. However, latest data from the options markets reveals a different side of the narrative. It is likely that Bitcoin Spot ETF approval is priced in, since there was little implied volatility observed in January 12 BTC options.
Analysts at the firm Greek Live believe that the January 12 BTC options are highly correlated with Bitcoin Spot ETF, since the first deadline for approval of the Ark/21Shares application is January 10. The outcome of the event would therefore reflect in the January 12 options data.
There is news in the market that the SEC will pass the Bitcoin Spot ETF application as early as next Tuesday, but there was little volatility across the major term IVs and the price.
— Greeks.live (@GreeksLive) December 31, 2023
Looking at the options data, Jan12 options IV, which is strongly correlated to the ETF, fell… pic.twitter.com/f1B4ZPC05d
The major term Implied Volatility observed was little relative to previous slots and the block was almost untraded according to Greeks Live. The Implied Volatility dropped rather than increasing and accounted for less than 2% of the day’s turnover, this is a relatively low share and a rare event in options markets.
Greeks Live analysts therefore believe that even if the SEC approves a Spot Bitcoin ETF, there may not be a significant impact since the market has priced in the event.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
