Are all the short-term ETF benefits gone, and is the bull market over?

Have Short-Term ETF Benefits Disappeared and the Bull Market Come to an End?

Original | Odaily Star Daily

Author | Loopy Lu

The current round of market increase comes from the expectation of the approval of Bitcoin spot ETF. However, this week, the fervor in the cryptocurrency market began to gradually fade.

On November 18th, Beijing time, the last Bitcoin spot ETF that could potentially be approved by the SEC temporarily settled.

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The SEC stated that it would postpone the decision date for Franklin Templeton’s Bitcoin spot ETF, extending the original 45-day deadline and postponing the decision until next year. Bloomberg ETF analyst James Seyffert analyzed that this delay was expected.

With the recent intensive postponement of ETF applications by the SEC, when will the “window period” for the next ETF resolution come? Odaily Star Daily has compiled the time points for the resolutions of each ETF, as shown below:

The data shows that the recent “window period” for resolutions has all ended, and it is difficult for positive news about ETF approval to come again within this year. The key time point for the next round of ETF resolutions will start as early as January 1st next year.

However, it should be noted that the deadline is only the final date for the SEC to make a decision. The SEC can make approvals, rejections, or postponements any day before the deadline.

Is the positive news shifting towards ETH ETF?

Although there have been continuous positive news about Bitcoin recently, it has not broken through the $40,000 mark. In the past two days, Bitcoin has been fluctuating in the range of $35,000 to $37,000. Although the decline is not significant, the market sentiment has clearly cooled down.

While the Bitcoin spot ETF is “cooling down,” we also see another potential direction in the market: ETH spot ETF.

On November 16th, Beijing time, BlackRock submitted its S-1 application for ETH spot ETF to the SEC, designating Coinbase as the custodian for ETH. On November 18th, Fidelity submitted the 19b-4 filing for its spot ETH ETF, becoming the seventh applicant for ETH spot ETF. In addition, other asset management companies such as Grayscale, ArkInvest, ProShares, and Valkyrie have also submitted applications for spot ETH ETF.

Affected by the news, the OKX market of EUROKu exchanges shows that the ETH/BTC exchange rate, after a long and persistent decline, has recently stopped its downward trend.

With one traditional financial giant after another submitting applications for ETH ETF, will the speculative expectation of ETF positive news shift from BTC to ETH?

Can ETFs Bring a New Bull Market?

The entire crypto market is eagerly awaiting the approval of ETFs. But how much of a change can ETF approval bring to the crypto market as a “good news” message? No one can give a definite answer until the “good news” is implemented and operates smoothly for some time.

Currently, there is still a divergence of opinions on the actual impact of this “good news” on the market.

JPMorgan observes that similar ETFs in Canada and Europe have generated very little interest since their launch. A report released by JPMorgan in the middle of this month shows that analysts are skeptical about the positive effects of ETFs. They believe that ETFs will not bring new capital into the crypto market, but will transfer existing Bitcoin capital to newly approved spot Bitcoin ETFs.

In addition, analysts also question whether the SEC’s losing cases against Grayscale and Ripple will result in a relaxed regulatory stance. “Regulations in the US crypto industry are still not in place, and we believe that US legislators will not change their stance because of the aforementioned legal cases, especially considering the recent memory of the FTX fraud incident.”

Analysts believe that the recent significant increase is excessive compared to Bitcoin’s fundamentals. Analysts believe that the price of Bitcoin has risen by 30% in the past month, and the expectation of the approval of spot Bitcoin ETFs is the main driving factor behind this increase. However, this factor is not enough to support such a substantial price increase.

Is the Bull Dead or is the Bull Market Here?

MVRV indicator shows that the current MVRV is already between 1.7 and 1.8. Generally, this indicator can reflect whether the current market sentiment is overheated.

The MVRV indicator has been continuously rising this year, reaching recent highs and returning to levels seen between January and April 2022. The Blokck’s data shows that the current discount rate for Grayscale’s GBTC is 14.78%, which is the lowest level since the end of December 2021, and it continues to narrow, indicating traditional market investors’ approval of spot ETF expectations.

Currently, we cannot assert whether this upward trend is the beginning of a new bull market or the end of a “mini spring.”

Regardless of the market’s direction, the halving event in 2024 will eventually take place as scheduled. It is expected that in April 2024, Bitcoin will experience its next halving. JPMorgan analysts believe that due to the instability of the fundamentals, the recent rise in Bitcoin may encounter setbacks, and the halving event and its impact are already well reflected in the current Bitcoin price.

At the current price of around $36,000, Bitcoin is currently only about 48% lower than the all-time high of nearly $69,000 reached in November 2021. Looking at the current price, the potential return between Bitcoin and ATH is not high (measured from a crypto market perspective).

With the upcoming ETF and halving, where will the market go next? Will the market finally come out of the “mini bull” ending predicted by the optimists?

JPMorgan analysts say that the current risks in cryptocurrency are still greater than the recent strong gains. Although the crypto community remains optimistic about the approval of a bitcoin spot ETF, he believes that the approval of a spot bitcoin ETF may result in a “buy the rumor, sell the news” type of decline.

Odaily reminds investors that the cryptocurrency market is volatile, so please exercise caution and manage risks properly.

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