Bitcoin

Before approving the spot Bitcoin exchange-traded fund (ETF) on January 10, the Securities and Exchange Commission (SEC) received recommendations from the United States Government Accountability Office (GAO) about three critical execution plans.

The proposals centered on how the regulator would handle the emerging business in the upcoming years and labor management for the digital asset market.

The SEC received the GAO recommendations on December 15 and the public was informed on January 16. The SEC should create a new personnel plan, record rules and procedures for internal controls at its Strategic Hub for Innovation and Financial Technology (FinHub), and create performance benchmarks and metrics for the hub, according to the GAO study.

Within the legislative branch of the US federal government, the GAO is an impartial, independent auditing organization that provides auditing, evaluation, and investigative services to Congress.

The SEC employs 116 people who focus primarily on issues connected to crypto assets, according to the GAO’s assessment of the agency’s capacity to handle the burgeoning crypto industry. To refresh its approach for the fiscal years 2019–2022, the SEC hasn’t yet created a new personnel planning strategy.

As per the GAO’s recommendation, the SEC would be in a better position to fulfill its future labor requirements and execute its policymaking and supervisory responsibilities concerning digital assets.

The SEC’s FinHub assists in coordinating SEC oversight of developing technologies, however the GAO discovered that it lacks formal policies, procedures, or performance targets. While FinHub has operating processes in place, such as interacting with market participants, it has not implemented rules and procedures to support internal controls.

After the evaluation, the GAO issued the following three recommendations:

1. A new workforce planning strategy that is in line with the agency’s 2022–2026 strategic and performance goals should be prepared by the top human capital officer, under the supervision of the SEC chief.
2.  The head of the SEC should make sure the director of FinHub records the guidelines and practices that underpin the company’s internal controls.
3.  The SEC chair should make sure the FinHub director creates quantifiable, focused, and objective performance goals and metrics.

In order to show whether the SEC has acted appropriately in response to the recommendations, the GAO has also included a live status section for each recommendation.

On January 10, the SEC issued a landmark ruling, approving 11 spot Bitcoin ETF applications. According to the SEC’s internal document, there were two votes against the motion and three in favor. After almost ten years of denials, SEC director Gary Gensler made the deciding vote to authorize the first spot BTC ETFs in the United States.

SEC chairman was put in a difficult situation about immediate approval of a Bitcoin ETF, according to gold bug and well-known Bitcoin opponent Peter Schiff. He cautioned that Gensler would “soon introduce new onerous crypto regulations that will substantially increase the cost of Bitcoin transactions, further undermining its ‘use’ case, resulting in a sharp decline in price.”

Since @GaryGensler was backed into a corner on spot #BitcoinETFs approval, I think he will soon introduce new onerous #crypto regulations that will substantially increase the cost of #Bitcoin transactions, further undermining its “use” case, resulting in a sharp decline in price.

— Peter Schiff (@PeterSchiff) January 17, 2024

The following day, all authorized spot BTC ETFs went live and had trading volumes of more than $2 billion on opening day.

Halving Cycle More Potent Than Narratives

Trader David suggests smart traders should view the potential further drawdown to $28k–$31k as a final “chance to load up on dips” before the post-halving bull market. Rather than panic, traders should prepare to take advantage of the opportunity.

Halving Countdown

While short-term price action may prove volatile and markets impatient, zooming out on the perspective emphasizes the critical moment Bitcoin has arrived at prior to its automated supply shock halving.

Traders with conviction in this macro backdrop would likely be prudent to take advantage of any relief rallies and scope out buy zone opportunities in the $28k to $31k range anticipated in the months ahead.

The first spot bitcoin (BTC-USD) exchange-traded funds that debuted on the U.S. exchanges were off to a roaring start, with more than $4.6B worth of shares changing hands on Thursday, propelling the top cryptocurrency briefly above $48,000.

The Grayscale Bitcoin Trust (OTC:GBTC), which uplisted to NYSE Arca after being cleared as an ETF, saw the largest trading volume on Thursday at $2.29B. BlackRock’s (BLK) iShares Bitcoin Trust (IBIT) saw over $1B change hands, while Fidelity Wise Origin Bitcoin Fund (FBTC) saw $688M in volume.

Standard Chartered projected that ETFs could draw $50B-$100B this year, while Bernstein expects flows to cross $10B.

“The ‘mature economy’ is actually embracing bitcoin (BTC-USD) as a full asset,” said Michaël van de Poppe, CEO of crypto consultancy MN Trading. “Expectations are that there is $200B worth of interest coming into the markets from institutional investors and this can have a major impact on BTC’s price.”

Bitcoin (BTC-USD) rose as much as 5% to $48.97K after the ETFs’ market debut on Thursday, its highest level since late 2021, but has since slipped to $45.85K, as of Friday. Ether (ETH-USD) briefly climbed to $2.69K on Thursday, and is now trading at $2.60K.

To note, many on Wall Street believe the investment is too risky for their clients and will not offer them access to trading the ETFs, such as Vanguard, Merrill Lynch, Edward Jones, and Northwestern Mutual.

The initial 10 minutes of trading saw a cumulative volume exceeding $2.3 billion, a record-setting figure likely to be propelled even higher by Bitcoin’s allure within a mere 6-hour timeframe. This volume surpasses previous daily records of $2.1 billion for other ETFs.

As anticipated, BlackRock’s IBIT, a spot Bitcoin ETF, attracted the most interest, with Bitcoin’s price recently breaching $48,969. Meanwhile, altcoins continue to experience double-digit growth, setting the stage for potential new highs for Bitcoin as trading volume increases.

The initial surge of excitement is expected to wane by tomorrow, potentially allowing Bitcoin to reach local peaks and pave the way for further gains in altcoins. Both BlackRock’s IBIT and Grayscale’s GBTC have been trending on Yahoo Finance, while Bloomberg Intelligence analyst Eric Balchunas highlighted the resilience and potential of ETFs.

Valkyrie’s co-founder and CIO, Steven McClurg, anticipates an influx of $200 to $400 million in investor funds for their ETF, with a total market entry of $4 to $5 billion expected in the first few weeks. Bitwise predicts the market could exceed $70 billion within five years, potentially adding $1 trillion to Bitcoin’s market value. However, investors should remain prepared for significant announcements, such as new BTC ETF-backed retirement fund products, while also being cautious of market volatility that could swiftly reverse gains.