Crypto Market: Bitcoin Outperforms as Spot-Based ETFs Await Approval

Coinbase Claims Approval of Bitcoin Spot ETFs Already Factored into Market Prices

Coinbase claims approval of Bitcoin Spot ETFs already accounted for in the market.

In the vast ocean of financial markets, there’s always one asset that shines brightly, drawing all the attention, while others struggle to stay afloat amidst the turbulent waves of macroeconomic challenges. And in the wild realm of cryptocurrencies, this asset is none other than Bitcoin (BTC). But why is Bitcoin leaving its crypto counterparts in the dust? Well, according to Coinbase Institutional, it all boils down to one factor – the potential approval of spot-based exchange-traded funds (ETFs) for Bitcoin.

“We think the divergence in the performance of Bitcoin and other tokens shows that the potential approval of one or more spot Bitcoin ETPs has already been partially priced in. That makes it less clear how much more Bitcoin could outperform if a favorable SEC decision occurs,” explains David Duong, head of institutional research at Coinbase Institutional.

Imagine a circus where all eyes are on the spectacular tightrope walker, while the rest of the performers fade into the background. That’s the current scenario in the crypto market. Since BlackRock and other finance heavyweights applied for spot-based BTC ETFs in June, Bitcoin’s price has skyrocketed by 8%, while Ether, the second-largest cryptocurrency, has experienced a dismal 7.5% decline. Talk about stealing the show!

But here’s where it gets interesting. Despite unfavorable developments in the U.S. Treasury yield curve, Bitcoin continues to defy gravity. It’s like a magician performing mind-bending tricks, unfazed by the perplexing twists and turns of the world around it. While the spread between yields on the 10-year and three-month notes has widened, Bitcoin remains steadfast, firmly establishing its independence from traditional market indicators.

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“In the crypto world, Bitcoin’s relationship with the yield curve is as distinct as night and day, much like Batman and the Joker. The term structure of the U.S. Treasury yield curve may be dancing chaotically, but Bitcoin’s performance remains unfazed,” Duong amusingly points out.

Bitcoin’s relationship with the yield curve is about as strong as a bench pressing contest between a featherweight and a heavyweight boxer. With a correlation coefficient of 0.45, it’s feeling the breeze of the yield curve’s movements but not exactly breaking a sweat. On the other hand, Ether boasts an inverse relationship so strong, it’s like two magnets repelling each other, with a correlation coefficient of 0.76.

“This deviation became apparent around the time multiple spot Bitcoin ETP filings flooded the U.S. market, causing a seismic shift in the crypto landscape,” Duong adds, painting a vivid picture of the cryptocurrency drama unfolding before our eyes.

The crypto world has been eagerly awaiting the arrival of spot-based Bitcoin ETFs. It’s like a kid standing outside a candy store, hands glued to the glass, hoping to taste the sweet flavors of mainstream adoption. According to NYDIG, once these ETFs become a reality, they could unleash a torrent of $30 billion in new demand for Bitcoin, giving it the attention it deserves.

But here’s the catch. Once these ETFs come into play, Bitcoin might lose its superstar status, blending into the crowd like an incognito celebrity. History has shown us that once futures-based ETFs were launched in 2021, Bitcoin’s sparkle diminished, at least temporarily. It’s like a shooting star that burns brightly for a moment, then fades into obscurity.

“That’s what happened with the SPDR Gold Shares ETF (GLD), the first spot gold ETF launched 19 years ago. After making a grand entrance, it began accumulating assets gradually over time. Bitcoin enthusiasts who consider the cryptocurrency as digital gold should keep this in mind,” Duong advises.

So, my fellow crypto adventurers, Fasten your seatbelts and prepare for the arrival of spot-based Bitcoin ETFs. But remember, Rome wasn’t built in a day, and the crypto market is no different. Bountiful inflows may take time to materialize, as impatient as our market tends to be.

In the meantime, keep your eyes peeled for these renowned ETFs, for they signify more than a simple influx of funds. They represent a significant shift in the regulatory environment, paving the way for brighter days and potentially boosting market valuations.

Exciting times lie ahead, my friends. The crypto circus never disappoints!

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