Bitcoin news: NYDIG says approval of a spot ETF could bring $30 billion in capital inflows

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Bitcoin news: NYDIG believes the SEC’s approval of a spot ETF on the major cryptocurrency could trigger $30 billion in demand.

Speculation of this kind comes after the US federal agency accepted BlackRock’s application for a spot ETF, making the dreams of crypto enthusiasts increasingly concrete.

Let’s take a look together at the details of the news and the price-level situation for Bitcoin.

Latest crypto news: NYDIG thinks approval of a spot Bitcoin ETF will bring $30 billion into the sector

The latest Bitcoin news discusses the searing words of cryptocurrency trading firm NYDIG, which believes spot ETFs on the industry’s leading cryptocurrency could immediately generate $30 billion in demand.

The first positive response came after several investment funds and asset management companies expressed their desire to the SEC in June for approval of such a financial product. The request made by BlackRock, the world’s largest hedge fund in terms of AUM, has been accepted by the federal agency, which will now begin an official review process.

While the likelihood of an ETF’s actual release by the beginning of the year is slim, there are already those, such as the Bitcoin company NYDIG, making early predictions about the effects that could occur.

On this topic, NYDIG stated In a report that:

“The brand recognition of BlackRock and the iShares franchise, familiarity with purchase and sale methods through securities brokers, and simplicity of position reporting, risk measurement, and tax reporting, a spot ETF could bring some noted benefits compared to existing alternatives.”

In detail, according to the New York-based firm, the fact that many funds already hold $28.8 billion in Bitcoin, for 4.9% of the cryptocurrency’s circulating supply, suggests that as much capital could come in the case of a spot ETF.

(USATO)

If we were to make a comparison with gold, an asset with which bitcoin is often associated, we can see that from November 2004 onward, the time when the first “US Traded Gold” (GLD) was approved, the commodity began a major upward run.

After the first 7 months of declines, gold posted a mind-boggling increase growing 63% overall in a year and a half.

Now, while considering that gold and Bitcoin have different structural conditions, with ETFs based on the precious metal now amounting to 1.6% of the supply, compared to 4.9% for the cryptocurrency, we can say that a SPOT financial product could generate an increase in demand, as happened in 2005.

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However, there is a need to consider that the macroeconomic environment in 2004 was totally different from that of today: the rally of gold in those years was mainly motivated by the weakening of the dollar and the rise of China as a world superpower.

As of today, probably the same financial product applied on Bitcoin would not have the same positive impact, with the understanding that it would generate a lot of interest by attracting liquidity into the industry.

As the Ecoinometrics newsletter writes, the real potential of launching a spot ETF lies in reconciling this event with two factors in particular: the FED’s shift to expansionary monetary policies and the current generational wealth transfer to younger individuals, who are more likely to invest in Bitcoin than their parents.

Focus on the price of BTC

Bitcoin’s current situation is stable, even following heavy speculation about the alleged approval of a spot ETF for the crypto.

Prices remain near the $30,000 mark for the fourth consecutive week without hinting at any signs of bullish continuation or bearish reversal.

The medium-term trend remains slightly bullish, with BTC holding firm after the rally at the beginning of the year and the mid-June pump with the announcement of new players such as BlackRock, VanEck, and Fidelity within the sector.

Unfortunately, volumes remained low and did not accompany the market growth, a signal that we may not yet be ready for a 2021-style bull market.

Now the most important levels to focus on are the $32,000, which if broken could trigger a climb to at least $36,000, and the $27,000 that served as support in the early days of June and converges as a 60-period exponential moving average on a weekly time frame.

Right now, the 27k-32k trading range is likely to last for several weeks, with good opportunities to speculate by going long at the low end of the channel and short at the high end.

Analyzing the situation from another perspective, the resilience of the supertrend indicator, which called the buy in mid-January 2023 and continues to signal the presence of a bullish environment, is noteworthy.

Should market volumes pick up, as they did in October 2020, and should the supertrend continue in this direction, we could see an uptrend in Bitcoin, with or without news regarding a spot ETF. 

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Weekly price chart of Bitcoin (BTC/USD)