Will SEC give thumbs up to Bitcoin ETFs? Traders bet yes

The U.S. Securities and Exchange Commission (SEC) is expected to approve several bitcoin exchange-traded funds (ETFs) this week, electrifying the cryptocurrency market.

Derivatives traders are betting big, with open interest in bitcoin futures jumping to $19.2 billion in early December – its highest in two years – before easing to $17-18 billion. “We eagerly await the SEC’s decision,” said Amberdata analysts.

Multiple asset managers have sought permission for bitcoin ETFs since 2013, only to be denied amid concerns about potential manipulation. But 2023 saw intensive lobbying as the SEC held talks with issuers, raising hopes the long-awaited funds would finally get the green light.

Excitement has gripped retail and institutional investors alike, with premiums on CME’s bitcoin futures contracts soaring. Bitcoin itself rose above $45,000 on Jan. 2, capping a 170% gain last year.

So much bullishness is baked in that negative ETF news could spark intense selling, analysts warn. Bitcoin’s price has already retreated from its recent peak, triggering over $1 billion in liquidations.

Even ETF approvals could see some profit-taking. “It highlights the market’s sensitivity,” said Bitfinex’s Jag Kooner. For now, bitcoin options implied volatility is at one-year highs as traders brace for SEC decisions.