Spot Bitcoin ETF update: The politics behind approvals according to investment bank TD Cowen

Spot Bitcoin exchange-traded funds (ETFs) approvals remain the main theme in the cryptocurrency market as new year trading catches steam. With most cryptos flashing green on the daily and weekly timeframes, the show of optimism comes as the window for approval opens, with two forecasts overlapping.

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Spot Bitcoin ETF approvals are a matter of politics, TD Cowen

Spot BTC ETFs could be approved between January 2 and 3, according to a recent Reuters report, even as the January 5 to 10 hard deadline continues to hold forte, as predicted by ETF specialists James Seyffart and Eric Balchunas.

As the market rallies on FOMO (fear of missing out) as well as the ‘buy the rumor sell the news’ situation, American multinational investment bank TD Cowen has birthed a new line of argument, saying the US Securities and Exchange Commission (SEC) will approve spot Bitcoin ETFs by January 10 as a "political necessity.”

According to TD Cowen, Per the bank, this is because the financial regulator has cause to prove itself as crypto regulator before Congress considers more far-reaching crypto regulation such as looking towards broader crypto legislation. The bank also believes the SEC would not want a loss on their score sheet on spot Bitcoin-ETF-related matters.

TD Cowen on possible Spot BTC ETF approvals

Meanwhile, Cathie Woods’ Ark Invest/21Shares spot BTC ETF is in the leading position for approvals, considering January 10 is the deadline for the SEC to give a determination on its application as the first filer. However, analysts anticipate a joint approval as the financial regulator does not want to present itself as a kingmaker.

Meanwhile, a K33 Research report by analyst Vetle Lunde indicates the probability of the sell-the-news scenario is as high as 75% against 20% odds for approval inflows pushing prices higher. Still, there is a 5% probability that the filings will be denied.

Lunde writes, “A sell-the-news event could become a self-fulfilling prophecy as a significant share of short-term market participants has eyeballed the event as an area for profit taking.” The analyst also highlights that traders appear to be significantly exposed ahead of the financial regulator’s determination, with derivatives pushing massive premiums following a three-month series of Bitcoin price moving north.