TD Cowen: SEC Approval of Spot Bitcoin ETFs Will Be Politically Necessary
TD Cowen, a prominent American investment bank, has predicted that the US Securities and Exchange Commission (SEC) will approve spot Bitcoin exchange-traded funds (ETFs) by January 10th. According to TD Cowen, this approval is seen as a “political necessity” due to the intertwined relationship between policy and finance. The SEC wants to establish itself as a capable regulator in the crypto space, especially with Congress gearing up to discuss cryptocurrencies. Avoiding any missteps with Bitcoin ETFs is crucial for the SEC to maintain its reputation.
The market expects a surge in Bitcoin prices as a result of the “fear of missing out” (FOMO) and the sentiment of “buy the rumor, sell the news”. The approval of Bitcoin ETFs by the SEC in the near future seems likely, given the buzz around Bitcoin and the trend of acting on rumors. The Ark Invest/21Shares Spot Bitcoin ETF, led by Cathie Woods, is considered an indicator of the SEC’s leanings.
To ensure fairness, TD Cowen suggests that the SEC might consider a joint approval method to avoid any appearance of favoritism.
However, Vetle Lunde from K33 Research offers a different perspective, stating that there is a 75% chance traders might “sell the news” once the ETF is approved. However, there is also a cautious 20% chance that the market could see a positive rally post-approval. This highlights the psychological dynamics at play and the increased demand for derivatives as the SEC’s decision approaches.
In addition to the SEC’s decision on Bitcoin ETFs, the crypto community is also keeping an eye on two bills proposed by Republicans. One bill focuses on regulating stablecoins at the federal level, while the other addresses the broader crypto market. These bills have passed one committee, but their fate in the Senate Banking Committee remains uncertain.
TD Cowen suggests that the “lame duck” period after elections might be a good time for discussions and compromises on comprehensive crypto legislation.
If the broader regulations face challenges, TD Cowen views the bill about stablecoins as a possible alternative. However, its success depends on political negotiations and consensus.
In conclusion, TD Cowen predicts that the SEC will approve spot Bitcoin ETFs by January 10th, citing it as a “political necessity”. The market expects a surge in Bitcoin prices due to FOMO and the sentiment of “buy the rumor, sell the news”. The crypto community is also watching two Republican bills on stablecoin and broader crypto regulations.