Bitcoin is on the verge of a potentially historic week, with the crypto market anxiously awaiting the approval of a spot Bitcoin exchange-traded fund (ETF) in the United States.
The belief is that such approval could trigger the next crypto bull market and drive widespread crypto adoption.
Several companies hoping to launch spot Bitcoin ETFs have submitted their latest Form S-1 amendments on January 8, increasing the anticipation.
Analysts and observers are predicting that the U.S. Securities and Exchange Commission (SEC) may grant approval for the first spot Bitcoin ETF around January 9 or 10.
Bloomberg’s Senior ETF analyst, Eric Balchunas, is notably confident that there is a 90% chance of approval.
Regardless of the outcome, the crypto markets are expected to experience significant turbulence.
The entry of giants like BlackRock and Fidelity, with trillions of dollars in assets under management, into the Bitcoin ETF market may alter the dynamics of companies like Coinbase and MicroStrategy.
MicroStrategy, in particular, could face challenges as a spot Bitcoin ETF could open doors for traditional investors to enter the crypto market, potentially affecting Bitcoin proxies like MSTR.
MicroStrategy has been accumulating Bitcoin as a hedge against inflation and currently holds a substantial amount, making it a popular choice for investors looking to indirectly invest in Bitcoin through the stock market.
However, with the approval of a spot Bitcoin ETF, MicroStrategy may lose its status as the go-to Bitcoin proxy for traditional investors.
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Spencer Bogart, a fundamental analyst, suggests that while the ETF approval could raise MicroStrategy’s stock price due to its Bitcoin exposure, it might also impact the stock’s premium compared to the actual value of Bitcoin it holds.
A spot Bitcoin ETF has the potential to drive crypto adoption by providing a bridge between traditional and crypto markets, attracting Wall Street capital.
This influx of capital could also benefit MicroStrategy by creating buying pressure on its stock.
Investors considering MicroStrategy over a Bitcoin ETF should weigh the fact that they won’t need to pay a management fee, unlike ETFs.
Additionally, MicroStrategy is a thriving business with a diverse portfolio and a strong financial position related to its Bitcoin investments.
Coinbase, on the other hand, has positioned itself as a custodian for various Bitcoin ETFs, including those from BlackRock, VanEck, and Grayscale.
This move could significantly boost Coinbase’s revenue and attract more traditional investment sector players to use its custodial services.
However, there are potential challenges for Coinbase, including a pending SEC case related to its staking-as-a-service program, which could impact its stock price.
In the midst of all this, Bitcoin’s price remains highly sensitive to the SEC’s decision regarding the spot Bitcoin ETF.
The recent 7% price drop on January 3, following hints of a potential SEC rejection, underscores the volatility of the cryptocurrency and the market’s dependence on regulatory decisions.
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