On October 18, 2024, the United States Securities and Exchange Commission (SEC) approved applications from the New York Stock Exchange (NYSE) and Chicago Board Options Exchange (CBOE) to list options for spot Bitcoin exchange-traded funds (ETFs). This substantial decision opens the doors for options trading across 11 Bitcoin ETF providers, representing a pivotal moment for the cryptocurrency market. The prospective approval is set to substantially enhance liquidity within Bitcoin ETFs, an area that has already evidenced robust institutional demand.
In a research note released on October 19, QCP Capital highlighted the significance of this action, asserting that inflows into ETFs are poised to receive a considerable boost. They stated: "The consistent inflows into the ETF highlight that institutional demand remains strong. With this morning’s SEC approval for BTC ETF options to be listed on the NYSE, we believe this will provide the ETF with the needed liquidity to attract sustainable inflows." Bitcoin ETFs have already accounted for about 75% of new investment in the cryptocurrency, especially notable in 2024 as Bitcoin eclipsed the $50,000 threshold.
The fresh liquidity generated from options trading could potentially propel Bitcoin to set a new all-time high, surpassing its former peak of over $68,000. As the 2024 US presidential elections loom, QCP Capital predicts a marked increase in risk-on sentiment, which could drive Bitcoin and various other cryptocurrencies upwards.
The firm pointed out that risk assets tend to rally during times of political unpredictability: "With US equities close to all-time highs and the Japanese yen on a fresh weakening trend, risk-on sentiment will only grow stronger as we approach the US election. This will propel risk assets higher and support our Uptober narrative." Bitcoin has already begun to reap the benefits of this heightened risk appetite, as reflected in recent reports indicating that former President Donald Trump's chances of reclaiming the presidency have surged to 60.2%. To validate a potential breakout from its existing trading range, Bitcoin must secure a weekly close above $68,700, as stated by renowned crypto analyst Rekt Capital.
The analyst commented on the cusp of a breakout in an October 18 X post: "On the cusp of confirming a breakout beyond the multi-month channel top resistance. A weekly close just like this would be bullish." This optimistic sentiment is reinforced by positive ETF inflows, with Bitcoin ETFs surpassing the $20 billion milestone in total net flows as of October 17.
In contrast, Gold-based ETFs required nearly five years to achieve the same target. With the recent approval of Bitcoin ETF options, augmented liquidity, and escalating market interest, Bitcoin appears strategically positioned for a potential breakout as it navigates the $70,000 threshold..