Traditional Financial Giants Bet Big on Spot Bitcoin ETF Approval Ahead of Jan Deadline

Market analysts anticipate the US Securities and Exchange Commission (SEC) to approve multiple spot Bitcoin ETFs in rapid succession. This has created a tense environment among applicants, particularly as the frontrunner stands to gain a significant first-mover advantage by attracting a substantial portion of everyday investors.

As the race heats up, the traditional firms appear to be actively engaging in this ETF trade.

Big Bets on Spot Bitcoin ETF

According to Reflexivity’s latest research, the current trend suggests that “the traditional financial firms have the ETF trade put on and are placing a high likelihood of approval by the January 10th deadline.”

In the past week, the digital asset funds with a structured framework experienced the highest influx of funds throughout 2023. CoinShares’ data revealed that the figure totaled $343 million during the period. This notable development can be interpreted in two ways, as per Reflexivity.

One, it may suggest heightened enthusiasm related to ETF front-running, or alternatively, it could signify a potential precursor to continued institutional interest in digital assets.

To top that, the discount of the Grayscale Bitcoin Trust (GBTC) to its net asset value is narrowing. The discount below 10% suggests a growing interest in gaining exposure to Bitcoin.

However, this shift is primarily attributed to sentiment regarding the potential approval of a Bitcoin ETF and the conversion of GBTC into an exchange-traded fund that would trade at parity with the underlying BTC the vehicle aims to offer exposure to

When considering the influx of funds highlighted in the preceding chart and the market movements of crypto proxies like Coinbase (COIN), Reflexivity stated that it becomes evident that traditional financial institutions are actively engaging in ETF trades, expressing a high degree of confidence in the approval likelihood by the January 10th deadline.

Improvement in On-Chain Liquidity

Amidst rising institutional confidence, the current stablecoin market has grown significantly. Upon analyzing Glassnode’s 90-day change in aggregated stablecoin supplies, Reflexivity observed a sustained growth in stablecoin supplies. As such, the aggregated stablecoin supplies are now up $2.2 billion over the last two weeks.

This essentially represented an increase of 2.8% over the last 90 days.

The upward trend in stablecoin reserves indicates an improvement in on-chain liquidity and signifies a greater pool of capital in the crypto economy to be deployed into directional bets on crypto tokens as well as in yield strategies within decentralized finance.