Is the approval of a Bitcoin ETF really important? Venture capital partner Adam Cochran: Not a big short-term impact

As the deadline for the prediction of the approval or rejection of a Bitcoin ETF approaches, Bitcoin price volatility has reached a new high in nearly two years. There has been a significant increase in on-chain activities of whale wallets. However, is the approval of a Bitcoin ETF really that important? Venture partner Adam Cochran believes that the short-term impact may not be significant.

The Market is Eager

As the U.S. Securities and Exchange Commission (SEC) is poised to approve or reject a Bitcoin spot exchange-traded fund (ETF), the crypto community has noticed significant volatility in the cryptocurrency market recently. Simultaneously, the on-chain activities of whales continue to rise, a sign that the market may be on the brink of significant fluctuations.

Bitcoin Price Volatility Surges

An analyst from Bitfinex, as reported by The Block, stated that the recent surge in Bitcoin's implied volatility suggests that derivative traders are preparing for unprecedented price swings.

The analyst revealed:

Signals from the options market in recent weeks indicate that derivative traders' expectations for Bitcoin price volatility have reached the highest level since 2023, particularly following the historic options trading volume recorded in December.

Whale Activity Continues to Rise

Another observation comes from the crypto market intelligence platform Santiment, which indicates that whale trading volumes have reached their highest level since June 2022.

Note: Whales are defined here as addresses with active trading volumes exceeding $100,000 or $1 million.

🐳 #Bitcoin is mildly declining as the weekend kicks off, and there may be some volatility ahead with whale transactions hitting their highest level since June 12, 2022. When whale activity spikes, prices often foreshadow a breaking cycle. https://t.co/8fdYC46H4G pic.twitter.com/BPGT77MRDV

— Santiment (@santimentfeed) January 6, 2024

The company stated:

With the significant increase in whale trading volume, the market may experience some turbulence in the future, a sign that often precedes a period of price breakthrough.

Bloomberg ETF Analyst: Gensler Has No Reason to Reject

Re the "but the SEC hasn't voted" and how that's some kind of poss rug pull. Few things, the SEC has never voted on bitcoin ETFs (spot denials or the futures approvals), they were denied or approved via "Delegated Authority" (see below from commish Peirce speech) which would make… pic.twitter.com/X8pzQchexj

— Eric Balchunas (@EricBalchunas) January 6, 2024

As multiple asset management companies that have applied for Bitcoin ETFs are expected to make final revisions to their documents by 8 a.m. today, Bloomberg's senior ETF analyst Eric Balchunas, who remains bullish, believes that the SEC commissioners are on the verge of the next voting stage, and Chairman Gary Gensler has no reason to reject:

If a vote is indeed taken, it's hard to imagine Gary voting against it. On the one hand, he lacks substantive reasons for rejection, and on the other hand, he has already engaged in extensive interactions and negotiations with 11 Bitcoin ETF issuers through SEC staff, indicating Gensler's openness to their development.

Eric further added that Gensler recently told SEC staff that he hopes the aforementioned negotiations and comments will be released on January 11.

However, he also cautioned that the SEC's public agenda does not schedule any meetings before January 11, but decisions can still be made through the same "delegated authority policy" by designated personnel.

Adam Cochran: Bitcoin ETF Will Have Long-Term Impact

I think most people are overestimating the impact of the ETF short term, while underestimating it long term.

Short term, flows may be meh.

But over the next year, every investment advisor is sitting down with their clients to review their portfolio is going to look at the new…

— Adam Cochran (adamscochran.eth) (@adamscochran) January 5, 2024

Furthermore, venture partner Adam Cochran believes that most people are overly focused on the short-term price impact of a Bitcoin ETF, overlooking its potential long-term effects.

Imagine, within the next year, investment advisors recommending their clients to invest a small portion, say 1%, of their funds in a Bitcoin ETF, especially considering Bitcoin's high returns in the second half of 2023.

He also emphasized that the structure of a spot ETF will help improve market health and encourage long-term holding, reducing extreme volatility:

The growth will be slow enough to make you doubt, but by the time you turn around, see Bitcoin prices rise to $500,000, and you're still waiting for a significant drop.

More Reports on Bitcoin ETFs

Bitcoin ETFs will bring market manipulation and fraud risks to more investors

U.S. non-profit organization criticizes Bitcoin spot ETF again: worthless gambling chips

BlackRock expects Bitcoin spot ETF to be approved on 1/10, with $20 billion in funds on the line