SINGAPORE - Bitcoin held a retreat as traders assessed how crypto markets might react if regulators meet expectations by approving the first US exchange-traded funds investing directly in the token.
The largest digital asset shed 2.4% over the past 24 hours and traded at US$42,400 as of 10.31am Wednesday in Singapore. Bitcoin is up 156% this year, a rally driven partly by wagers that the ETFs will encourage fresh demand.
One key issue is whether an actual green light for the products will spur some profit-taking, based on the adage that investors "buy the rumour and sell the news." Put another way, the potential interest in the spot Bitcoin ETFs planned by the likes of BlackRock Inc and Fidelity Investments remains unclear.
The market is "almost certain" that the US Securities & Exchange Commission will give permission for spot Bitcoin ETFs before Jan 10, Nic Carter, founding partner at Castle Island Management LLC, said on Bloomberg Television. The funds will widen the base of crypto investors in the medium term, he said, while flagging the possibility of a "news selling event" in the more immediate period.
Smaller tokens such as Avalanche and Solana posted larger losses than Bitcoin in the past 24 hours, while meme-crowd favourites like Dogwifhat also sank. BNB, the coin of the Binance exchange, bucked the selloff with a 10% climb.
Bitcoin’s advance this year has also been fuelled by expectations of declining interest rates in the US. The rally has partially repaired the damage from a precipitous 2022 crash that reverberated around the crypto industry. The token remains below its record of almost $69,000 in the Covid-19 pandemic era.