Trade of The Week: Bitcoin ETF awaits SEC approval

• Clock ticks down to Bitcoin ETF deadline

• Potential SEC approval will mark historic moment

• Watch out for other possible outcomes

• Bitcoin could see heightened levels of volatility

• Will Bitcoin rally or slump?

Bitcoin is the talk of the town this week, as the clock ticks down to the Securities and Exchange Commission’s (SEC) 10th January critical deadline to vote on Bitcoin ETF applications.  

The cryptocurrency entered the new year in a volatile and choppy fashion amid growing speculation over regulators giving the green light. Indeed, the approval of a spot Bitcoin ETF would mark a historic moment for the digital asset – representing potential inflows of new investors.

Taking a quick look at the technical picture, Bitcoin has entered standby mode on the daily charts with prices trading marginally below $44.5k as of writing.

Whatever decision the SEC takes on Wednesday, it is likely to have a lasting impact on Bitcoin.

In the meantime, here are 3 potential outcomes to watch out for:

1. SEC approves Bitcoin ETF applications

The SEC approves the first bitcoin ETF in the United States, marking a watershed moment after 10 years of failed applications.

A spot bitcoin ETF is a big deal and provides investors with easier and supposedly more reliable access to the world’s largest cryptocurrency without having to purchase it directly.

• This outcome could trigger an aggressive appreciation in Bitcoin prices due to the prospects of fresh inflows from retail and institutional investors.
• However, given how markets were expecting the ETF approval - this could result in a “sell the news” type of reaction that drags prices lower before investor inflows push prices higher down the road.

2. SEC delays Bitcoin ETF applications 

It is worth keeping in mind that the SEC sued Coinbase back in June for operating as an unregistered securities exchange, broker and clearing agency.

Given how Coinbase is the largest US crypto exchange and the only one that’s a public company, it stands to greatly benefit from a spot Bitcoin ETF approval as the middleman.

• Should this situation lead to possible delays in the ETF approval process, bitcoin prices could slip amid the uncertainty.

3. SEC rejects all Bitcoin ETF applications.

The SEC recently tweeted “NO GO to FOMO”, essentially warning about the fear of missing out behavior for cryptocurrencies and other trending investments.

• While the SEC rejecting the ETF applications seems to be the most unlikely outcome for markets, this could send bitcoin plummeting if it becomes reality.

Technical outlook:

Bitcoin is turning bullish on the weekly charts with prices respecting a weekly bullish channel.

Prices have entered standby mode ahead of Wednesday’s major risk event. However, resistance can be found at $44,500 with the next point of interest at $50,000. Beyond this point is the all-time high just below $69,000.

Should prices slip back below $37,000, this may open the doors towards $30,000 and $20,000.