Crypto investors of all sorts are patiently waiting on spot bitcoin ETF approval from the Securities and Exchange Commission, with the price of bitcoin (BTC-USD) soaring in anticipation of the potential sign off. Dinara Co-Founder & CEO Laurence Latimer joins Yahoo Finance to discuss what would happen both immediately, and down the line, if the ETF is approved and how other cryptocurrencies can benefit from it.

Latimer believes "it would be a massive event for the industry" and that it would be a "great support for the institutionalization of digital assets and the mainstreaming of digital assets, widespread adoption." However, he also believes that "much of the price movement has largely been priced in" and that there is some "frothiness" in bitcoin prices.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

JARED BLIKRE: As the markets price in rate cuts into the new year, those in crypto are betting big money on a spot Bitcoin ETF and it becoming a reality as the SEC gives companies a new deadline of December 29 to make final changes to their applications. The new deadline has led many industry watchers to predict a wave of approvals come January, but not necessarily news there. Bitcoin is now trading above $42,000, reaching levels this month we haven't seen since April of 2022.

And for his take on what is coming next for crypto, let's bring in Laurence Latimer, the co-founder and CEO of Dinara, a crypto-trading platform. Laurence, thank you for coming in here today. So what is the importance of this spot Bitcoin ETF? I've been tracking this for months. I've been seeing the enthusiasm. But I guess the big question is when we get this finally maybe on January 10, is it a sell-the-news event?

LAURENCE LATIMER: Yeah, and I thank you for having me. First of all, as we come down to thinking about what's happening for the Bitcoin approvals-- Bitcoin ETF approvals, the reality is much of the enthusiasm, as you just said, much of the attention has-- and much of the price movement has largely been priced in. That's what we think here at Dinara, and that's certainly what we believe.

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It's going to be a massive event for the industry. The work that's gone into that from some of the largest firms in the industry has been happening over two-- some of them over two years. So it is a really massive event. It's a great sort of support for the institutionalization of digital assets and the mainstreaming of digital assets, widespread adoption. But we do think there's maybe a little bit of frothiness there and that the kind of price movement that many are expecting to see may already be mostly priced in.

BRAD SMITH: And so with that in mind, do you think about the perhaps tail, the longer tail of it? We'll see a jump, perhaps, early on in inflows into some of these ETFs, but then what after that? What is perhaps a good baseline for us to consider looking at the amount of flows that actually make their way into one of the riskier parts of the asset classes out there?

LAURENCE LATIMER: Yeah, well, you know, we made some predictions for 2024, and so this sort of falls firmly in the space there. We think that there's going to be some real meaningful appreciation across the whole industry. In October, the overall market cap for digital assets sat at around $1 trillion. It's now about $1.6 trillion. We think by the end of 2025, you'll be sitting at about $2.5 trillion in overall market cap. So if you kind of averaged that across the industry, we think there's another 50% or so upside built into the, you know, pricing of all assets. We think Bitcoin's among them.

What we'll see is that ETF demand that's created there will put a nice floor and support for price movement. We also think there's some optimism around the legislative front. We hope to see some thoughtful legislative action at some point in 2024 as well. That will, again, put some upward pressure.

And then you have Bitcoin halving, which is a technical piece that's happening, I believe, in April. And that traditionally has also put some upward pressure on the price of the asset.

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Bitcoin has already priced in spot ETF approval: Expert - Yahoo Finance

The crypto market continued its bullish run on Wednesday with most of the major cryptocurrencies moving higher. There wasn't any major news about the industry overall, but small tidbits are giving investors enough reason to buy.

Bitcoin (BTC -0.34%) is up 3.2% over the last 24 hours as of 4 p.m. ET, Solana (SOL 13.29%) has jumped 10%, and Near Protocol (NEAR 9.61%) is up a whopping 18.6%.

Last night it was announced that Blackrock, Nasdaq, and the Securities and Exchange Commission met yesterday for a second time to discuss rule changes to list a Bitcoin exhcnage-traded fund (ETF). The possibility of an ETF coming to market has been speculation all year and these appear to be at least small steps toward making that a reality.

An ETF could bring new money into the crypto industry by making it more accessible. It's still relatively difficult to buy and sell cryptocurrencies, so a low-cost exchange-traded fund would allow investors to get access without having crypto wallets or working with centralized crypto exchanges.

Solana's rise continues, helped by news that it's now home to more decentralized trading volume than Ethereum. Solana's low cost and fast speed have made it a go-to blockchain for developers and that's helping push the token higher.

Near Protocol is seeing an inflow of investor interest today as the blockchain attracts more developers and collaborations, opening up potential use cases.

The two drivers of cryptocurrency right now are the flow of funds into the industry and the utility being built on the blockchain. All three of these cryptocurrencies are benefiting from that.

A Bitcoin ETF could bring in more investors with a low-cost financial instrument and that could pave the way to more cryptocurrencies getting ETFs. And the SEC ruling positively, in this case, could lead to a thawing for crypto regulation in general.

I think the long-term driver of the industry will be a growing number of use cases for the blockchain. From financial instruments to logistics uses, companies big and small are testing how they can use the blockchain. I think that will open up more use cases and companies built using this technology.

It's less clear how that will benefit specific tokens. Solana, for example, is so low-cost that even a large rise in transactions won't increase the fees, and tokens like the stablecoin USD Coin can be used as the medium of transaction.

Speculation is still rampant in crypto and that's driving a lot of the increase in value short-term. But there are improvements in the underlying technology and utility, which investors shouldn't overlook. And as long as there's an inflow of funds and an increase in innovation the market can keep moving higher.

Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

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Why Bitcoin, Solana, and Near Protocol Jumped on Wednesday - The Motley Fool

As applicants for spot Bitcoin (BTC) exchange-traded funds (ETF) rush to incorporate new cash-only requirements into their proposals in the last month of 2023, some analysts still expect ETF approvals in the United States by early 2024.

Bloomberg ETF analysts James Seyffart and Eric Balchunas anticipate that the U.S. Securities and Exchange Commission (SEC) will approve a spot Bitcoin ETF in January 2024 despite multiple last-minute amendments that applicants are scrambling to add to their proposals.

Seyffart took to X (formerly Twitter) on Dec. 21 to share his observations aboutBlackRocks latest spot Bitcoin ETF update from Dec. 18, which accepted the SECs cash redemption system instead of in-kind redemptions, or those implying non-monetary payments like BTC.

The analyst noticed that BlackRocks latest iShares Bitcoin Trust ETF S-1 registration statement replaced the term prime broker and the trade credit lender with the prime execution agent, noting that the SEC might not be comfortable with the change.

Will be interesting to see who updates their documents after this, Seyffart wrote, adding that the SEC might not accept a condition where a third party would buy and sell Bitcoin on behalf of the ETF in the Bitcoin cash model.

The analyst notedthat multiple applicants like ARK, Bitwise and Valkyrie have already set up for a cash-only model, while some including Grayscale and WisdomTree still have in-kind or cash in their filings.

Related: Spot Bitcoin ETF will be bloodbath for crypto exchanges, analyst says

All this is to say we still think this is happening by Jan. 10, Seyffart stated. He added that some issuers may be left behind, referring to some filers failing to accept the SECs cash-only model.

Seyffarts colleague Balchunas agreed that the ongoing meetings and calls between the SEC multiple spot BTC ETF filers are an interesting and good sign for January.

We are hearing it wasn't one giant conf call b/t SEC and every issuer but rather many calls to exchanges/issuers to reiterate that its Cash Creates or You Will Wait, Balchunas wrote.

Magazine: Lawmakers fear and doubt drives proposed crypto regulations in US

Excerpt from:
Spot Bitcoin ETF approval 'still happening' by Jan. 10, analysts say - Cointelegraph

Bitcoin and other cryptocurrencies edged lower Friday but remained near their recent peak, little shaken by a selloff earlier in the week. The pattern of dipsand dip-buyingmay bode well for the overall momentum in digital assets.

The price of Bitcoin has shed less than 1% over the past 24 hours to $42,750, having earlier traded as high as above $43,000still shy of the largest digital assets 20-month high above $44,000 notched a week ago. Bitcoin has rallied by more than 50% in two months but continues to exhibit volatile...

Bitcoin and other cryptocurrencies edged lower Friday but remained near their recent peak, little shaken by a selloff earlier in the week. The pattern of dipsand dip-buyingmay bode well for the overall momentum in digital assets.

The price of Bitcoin has shed less than 1% over the past 24 hours to $42,750, having earlier traded as high as above $43,000still shy of the largest digital assets 20-month high above $44,000 notched a week ago. Bitcoin has rallied by more than 50% in two months but continues to exhibit volatile swings within its trend, selling off to below $41,000 earlier this week before bouncing back.

Its clear that Bitcoin is in a bullish uptrend. Dips are not pulling back nearly as substantially as expected following big rallies. The dips are instead getting bought up by what appears to be large-scale buyers, said Bob Ras, co-founder of the digital asset exchange Sologenic. This most recent long liquidation briefly shook the market, yes, but then a consolidation took hold and it appears now that we are again experiencing strong upwards momentum.

Traders continue to anticipate that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF), possibly ushering in a fresh wave of investor interest in cryptosbut thats not the only factor boosting crypto prices. The macro backdrop for risk assets has also helped, especially expectations that the Federal Reserve will cut interest rates multiple times next yearwith Bitcoin gaining with the Dow Jones Industrial Average and S&P 500 after the latest Fed meeting.

Beyond Bitcoin, Ether the second-largest cryptofell 1% to $2,270. Smaller tokens or altcoins were weaker, with Cardano and Polygon each sliding 3%. Memecoins were more muted, with Dogecoin and Shiba Inu shedding 1% each.

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Write to Jack Denton at jack.denton@barrons.com

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Bitcoin Slips. What the Dips Say About the Crypto Rally. - Barron's

Bitcoin has recently achieved new highs in 2023, but there's a question lingering: Is the market over-extended, and have we reached the pinnacle of enthusiasm? We can gain insight into these inquiries by examining the positioning of the crypto options market.

The most apt comparison to Q4 2023 is the rally we saw in Q4 2020. In fact, by superimposing BTC returns for both years, we can discern a strikingly similar narrative unfolding.

(BTC spot performance 2020 green and 2023 orange)

At present, the implied volatility of options (which represents an investor's bet on BTC's future realized volatility) is hovering near its 2023 peak, primarily driven by the buying of call options. This could indicate the market is already factoring in the explosive upside potential we're all hoping for.

Nevertheless, when we look back at the implied volatility of BTC over the past four years, it remains relatively subdued, implying that BTC hasn't yet demonstrated the explosive rally it is historically capable of. When BTC surged in Q4 2020, the accompanying option volatility peaked at around 150%, whereas today it stands at approximately 50%.

(BTC implied volatility for at-the-money options)

We can also draw a comparison between the historical futures basis today and that of January 1, 2020. Back then, the futures basis on Deribit was 20% annualized, equivalent to 17 times the 10-year risk-free rate. Today, the futures basis is around 10% or 2.4 times the equivalent risk-free rate. These substantial disparities between now and 2020 don't necessarily forecast higher spot prices, but they do suggest that potential buying power is still largely on the sidelines.

Finally, it's crucial to note that the implied volatility option traders are willing to pay is closely tied to the actual volatility that BTC is experiencing (realized volatility), which has hit new lows in 2023. This connection is often referred to as the Variance Risk Premium (VRP), and it has been widening since mid-October. Recently option traders have consistently been willing to pay a significant premium over realized volatility in BTC, anticipating the possibility of explosive movements.

(BTC at-the-money implied volatility Term Structure)

Were currently witnessing an especially pronounced implied volatility kink higher for the January option expiration month. This reflects the anticipation that the Securities and Exchange Commission will approve/deny spot Bitcoin ETFs, causing markets to move.

The forward volatility (the actual implied volatility differential priced between the Dec. 29 expiration and the January contract) currently resides around 57%, a 12-point premium of about 30-day realized volatility of 45%.

This situation either suggests that option buyers are making incorrect and overpriced bets, or that substantial volatility in BTC will not only continue, but grow larger.

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Why 2023 Is Like 2020 and Bitcoin Is Set to Head Towards $50k - CoinDesk