- So far in 2023, 13 spot Bitcoin ETF proposals have been submitted.
- In addition to ETFs, there is also some excitement around Bitcoin NFTs.
In 2023, Bitcoin saw major developments that provided a preview of what’s to come in 2024. ETF proposals submitted during the year and BTC’s corresponding responses provided valuable insights.
It showed the potential influence of institutional investments on price movements. Furthermore, the increasing popularity of Ordinals Inscriptions underscored the additional usefulness and significance of the network.
What a joke Bitcoin ETF is
A spot Bitcoin exchange-traded fund (ETF) is an investment vehicle that allows regular investors to gain exposure to Bitcoin price movements within their standard brokerage accounts.
Unlike BTC Futures ETFs, a spot BTC ETF invests directly in BTC as the underlying asset, instead of using derivative contracts based on their prices. The first application for a US Bitcoin ETF was filed in 2013, but gained increasing attention in 2023.
However, so far the US Securities and Exchange Commission (SEC) has not approved any proposal. Despite the SEC’s seemingly firm stance, there are indications that approvals are on the horizon.
Some of the notable institutions that have applied so far
Black rock
On June 15, BlackRock, the world’s largest asset manager, filed for a Bitcoin spot ETF. The filing presented Coinbase as the crypto custodian and spot market data provider.
At the same time, BNY Mellon was named as the custodian of the money.
In mid-July 2023, the US Securities and Exchange Commission (SEC) officially accepted BlackRock’s application for review. This followed the resubmission earlier this year. BlackRock made a second change to its S-1 filing later in November, introducing additional key details.
On December 18, BlackRock submitted a revised proposal to address regulators’ concerns. The updated proposal outlined that BlackRock’s ETF would include cash creation and redemption mechanisms.
The new update aligned with the SEC’s preferred model. Another one on December 22 update was submitted.
VanEck
VanEck, a large institution, was one of the first applicants. She initially submitted her first application in 2018, but it was subsequently withdrawn in 2019.
Despite several rejections, VanEck submitted his last application on June 22, 2023. This recent filing sought approval to launch the VanEck Bitcoin Trust on the Cboe BZX exchange.
Additionally, it filed an amended application for the product on October 27. The amended filing showed a potential shift to using Bitcoin directly instead of cash for the product launch. Additionally, Gemini was named as the custodian of the proposed ETF.
Grayscale
Grayscale, another institutional player, is seeing increasing optimism about ETF approval after a recent legal victory at the SEC.
The August ruling stated that the SEC could not stop Grayscale from converting its Bitcoin Trust (GBTC) into a spot ETF. The explanation behind this decision was that the SEC had already approved Grayscale’s futures funds.
This made the argument against spot conversion ‘arbitrary and capricious’. In the event of SEC approval, Grayscale plans to transfer GBTC from the OTCQX market to NYSE Arca. Notably, the SEC did not challenge the ruling.
Bitcoin ETF Proposal Approved… Oh, Wait!
On October 16, news circulated that BlackRock had received approval for its spot Bitcoin ETF. This was also around the same time that Grayscale was celebrating its win against the SEC.
These developments led to a remarkable increase in the price of BTC. However, Muntelegraafthe original source of the news, later came out saying the news was fake.
An analysis of the BTC chart highlighted a price increase of more than 5% on that day. The price started at around $27,186 and climbed to over $30,100 before closing the day at around $28,546.
Source: TradingView
Although the fake news had a significant impact on price movements, legitimate news about the proposals submitted also affected price movements. The impact was that news of the proposal’s filing had a gradual effect, unlike the sharp increase caused by the false report.
If we take the example of the news of BlackRock’s entry on July 15, the price rose by only 1.30%.
On that day, BTC was trading around $25,600. The price continued to rise over the next few days, rising above $30,000, and remained in that price range until about mid-August before the trend slowed.
Source: TradingView
How Bitcoin Might React to a Spot ETF Approval
Based on the observed reactions to news events such as proposal submissions and fake ETF approval news, Bitcoin is expected to rise in price after actual approval.
However, this response may unfold gradually as traders carefully verify the authenticity of the license. The initial increase in value is expected to come from existing and new traders rushing to buy in anticipation of a price increase.
Further increases in value are likely to be driven by institutional funds entering the market, contributing to a rise in demand.
Some predictions suggest that 2024 could be the year that BTC reaches the $100,000 price range. While there is no clear answer yet from the SEC, approvals could potentially be granted before the end of the first quarter of 2024. Some optimistic forecasts even point to approval as early as January.
Despite the focus on spot ETF proposals, 2023 also saw a significant impact from Ordinals on BTC. This added utility has contributed to the broader developments that have shaped BTC’s journey throughout the year.
Enter Bitcoin ordinal inscriptions
Bitcoin Ordinals serve as the blockchain equivalent of non-fungible tokens (NFTs), using satoshis, the smallest denomination on the chain. These ordinal numbers are created (minted) through a process similar to traditional BTC transactions. They adhere to a specific protocol that distinguishes them as special types of BTC transactions.
The rise of Bitcoin Ordinals has impacted the Bitcoin network, leading to an increase in usage, transaction fees, and storage space. This trend has expanded the narrative around BTC as a ‘store of value’ and contributed to a broader perspective on its usefulness.
The popularity of Ordinals Inscriptions is evident from the trend of the total number of inscriptions. It is also evidence of the growing interest and commitment to this new aspect of the network.
How ordinal inscriptions became popular
An investigation into the trend of Bitcoin Ordinals Dune Analytics revealed a gradual and sustained increase in popularity, despite a slow start.
The growth was reflected in the significant increase in the number of daily inscriptions. There were periods when it seemed like the Ordinals craze had waned due to the drop in daily numbers. Yet every time it fell, it bounced back, often setting new daily records.
For example, after a drop in daily numbers around July, the trend picked up the following month. After recovering, it reached a record of more than 440,000 daily registrations in September.
After a subsequent decline in September and early October, the number rose again to more than 505,000 on November 12. The number of daily inscriptions dropped to 3,960 in September and October. At the last update, the total number of registrations was over 51.3 million.
Source: Dune Analysis
Furthermore, the growth in daily registrations has led to higher transaction costs. Data from Dune Analytics showed that the Ordinals’ total fees at the time of writing were over $213.6 million.
A recent chart analysis shows that daily fees have increased, which is consistent with high daily fees being maintained.
Source: Dune Analytics
How these developments could impact Bitcoin in 2024
The approval of a Bitcoin ETF will have a positive impact on the price development of BTC. This is because historical patterns have shown price reactions to previous ETF-related announcements.
The positive sentiment surrounding this expectation coincides with the expected bear market in 2024.
In addition to the ETF developments, the Bitcoin NFT collection called Frogs has entered the top list of NFT collections DappRadar in the past 30 days.
Furthermore, the network is among the top 5 chains with the highest NFT sales Crypto Slam. With the addition of both traditional financial market developments and NFT innovations, the prospect of BTC is attractive.
The current price development of Bitcoin
At the time of writing, Bitcoin was showing strength in its current bull trend. The Relative Strength Index (RSI) recorded a trend of almost 60. The chart shows that the bull run started in October and has continued since then.
Read Bitcoin (BTC) price prediction 2023-24
The chart also showed that since breaking through the $40,000 price range, it has maintained this level.
At the time of writing, BTC was trading around $45,299, having gained around 6% in the past 24 hours.