Bitcoin ETF approval won’t trigger crypto market recovery

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Cryptocurrency options trading platform Greeks.live has dashed hopes of a significant price increase after U.S. regulators approved a spot Bitcoin ETF.

According to one tweet Greeks.Live reported that recent market data from its trading platform showed little change in volatility, implied action (IV) and price, despite speculation that the SEC would approve a Bitcoin spot ETF application next Tuesday.

IV measures the market’s expectations for future price movements of options contracts.

according to Report According to Reuters, the U.S. SEC may contact Bitcoin ETF applicants as early as next week. The development is expected to be crucial for the cryptocurrency market, allowing investors to trade Bitcoin-backed ETFs on regulated exchanges. However, the tweet suggests that market activity was unexpectedly low ahead of the news.

There is news in the market that the SEC will pass the Bitcoin spot ETF application as early as next Tuesday, but the main term IV and price fluctuations are not big.
Looking at options data, the January 12th option IV, which is strongly correlated with ETFs, fell… pic.twitter.com/f1B4ZPC05d

— Greeks.live (@GreeksLive) December 31, 2023

Options data shows that implied volatility for options on Jan. 12, near a critical time for the ETF, fell rather than rose. Moreover, the trading volume of these options is significantly lower, accounting for only 2% of the total trading volume on the day.

Based on these insights, Greeks.live asserts that the market has priced in the possibility of a spot Bitcoin ETF being approved. Simply put, market participants may have anticipated this event and adjusted their positions accordingly, resulting in the actual approval having a limited impact on price and trade fluctuations.

Asset managers BlackRock, Valkyrie and Van Eck filed revised S-1 forms with the U.S. Securities and Exchange Commission on Dec. 29, the last day for the SEC to review the forms in January 2024. Invesco Galaxy, Bitwise, WisdomTree and Fidelity followed with submissions.

BlackRock’s updated filing lists Jane Street and J.P. Morgan Securities as “authorized participants” in the proposed Bitcoin spot ETF application. BlackRock has confirmed that it will adopt an all-cash model. This is the first user to settle a transaction on J.P. Morgan’s tokenized collateral network service on October 11.