It doesn’t appear as if the market is pricing in a specific outcome on the ETF decision of 11 March as of yet. If I recall correctly, a rudimentary proxy for the betting man’s odds was 46% approval, based on how some futures were being priced. Let’s just call it 50/50.
Bitcoin moves heavily based on sentiment, so an approval would see an increase in price. Just how much is anyone’s guess, but for the sake of this post, let’s say anything from 15% to 30% over the very short term.
Let’s also work off a base of $1,000 per coin.
If ETF is declined, then no doubt a price drop. I think the 900’s will go by quickly, and things might hesitate in the high 800s, touching mid 800’s for a while at a possible ‘worst’ case scenario. My personal view is that after the drop, the price will recover to high 900’s as people realise that what btc represents has not changed, most likely reconciling themselves to the fact that it doesn’t mean that we wont get an ETF approved at some point in the future.
Also, if a decision isn’t being priced in now, then perhaps it is fair to assume that the price would revert to some kind of 30 day moving average, eg: $1,000.
What makes me think that 46% is maybe too low for a probable favourable outcome, is I recall a few weeks back that COIN announced that various 3rd parties would be engaged to provide 3rd party, arm’s-length services to the ETF. I have ZERO understanding as to how the SEC approval works, but if I (naively?) apply some experience dealing with regulators in other jurisdictions, there is generally engagement leading up to a decision like this. It isn’t just apply and see you in several months.
Now it may be that the SEC had said to COIN that an approval would be forthcoming if they could beef up their 3rd party service providers…I recall some criticism as to how many of the pricing, custodial, admin type services for COIN were going to be done in-house, which was potentially not desirous for an approval.
So the hopeful side of my brain is thinking that COIN did the necessary based on discussions with SEC, so as to meet their final requirements prior to decision date.
If you’re a betting person, I think the probability of an approval and what this means to short term price, is great than the downside risk, partly because of my theory around 3rd party service providers, and partly because I think bad news price will revert to some kind of mean, when they realise that the sky isn’t falling – something which we’ve seen of late with PBOC news. The price has shrugged it off well, IMO.
Will I be taking a bet on this….still deciding
Take this for what it is.