The crypto market is significantly underestimating the potential impact of the approval of a spot Bitcoin exchange-traded fund (ETF), according to analysts from crypto research firm K33, formerly known as Arcane Research.
In a market report published on September 5th, K33’s senior analyst Vetle Lunde and vice president Anders Helseth pointed out that the sentiment regarding a spot Bitcoin ETF approval had not been adequately reflected in the prices of Bitcoin and other major cryptocurrencies, despite significant developments over the past three months.
While Bitcoin appeared to lose its gains following Grayscale’s legal victory over the Securities and Exchange Commission (SEC), Lunde and Helseth argue that a spot ETF approval could result in “enormous inflows” and a substantial increase in buying pressure for Bitcoin.
They also noted that the potential downside of a spot ETF rejection would be “negligible,” and Bitcoin prices would likely continue with business as usual.
Furthermore, Lunde and Helseth emphasized that the market’s outlook on ETFs is fundamentally incorrect, especially considering the growing likelihood of spot ETF approvals. Several Bloomberg analysts are now predicting a 75% chance of approval within the year.
Lunde stated, “I firmly believe the market is wrong. This is, by all accounts, a buyer’s market, and it’s reckless not to aggressively accumulate BTC at current levels.”
To support their bullish prediction, the analysts pointed to the recent 2% gain in the Nasdaq-100 index, which is often seen as an indicator of the broader market’s risk appetite.
They also drew parallels between Bitcoin’s potential trajectory and the weeks leading up to the launch of the first Bitcoin futures-based ETF on October 19, 2021, during which Bitcoin gained approximately 60%.
Looking ahead, the analysts noted that a decision on a futures-based Ether ETF is expected in mid-October and is reportedly set to receive approval from the SEC.