Countdown To Spot Bitcoin ETF Approval Begins As Critical Fed Decision Nears

On Friday, January 5, 2024, stock exchanges, investment management firms, and the U.S. Securities and Exchange Commission (SEC) engaged in discussions regarding final wording changes on filings for Spot Bitcoin Exchange-traded Funds (ETFs). According to a report by Reuters, sources familiar with the matter indicate that this development might pave the way for U.S. approval of Spot Bitcoin ETFs as early as next week.

Spot Bitcoin ETF Approval Date

During these discussions, issuers conferred with SEC officials on the S-1 prospectus documents, mandatory for Spot Bitcoin ETF approval. Representatives of five firms, including executives, who opted to remain anonymous due to ongoing confidentiality, revealed that multiple issuers anticipate receiving final approval of S-1 filings by late Tuesday or Wednesday.

The SEC asked for a few alterations in the filings, which were labeled as “minor” changes by three issues. However, the agency did not provide comments on individual filings, according to a spokesperson. Certain asset managers are expected to amend their filings by 8 a.m. ET on Monday, January 8.

These amendments would reveal details such as fees or the names of the market-makers for their Bitcoin ETFs. Moreover, the information could be made publicly available on the same day as indicated by sources.

Recently, regulators collaborated with exchanges to finalize 19b-4 filings, outlining rule changes necessary for SEC approval of spot Bitcoin ETF launches. On Friday, exchanges submitted revisions to 11 of these filings. Insiders familiar with the process suggest that issuers meeting end-of-year filing revision deadlines may secure approval to launch by January 10, the crucial date for the SEC’s decision on the Ark 21Shares ETF, which is first in line.

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The Spot Bitcoin ETF approval deadlines include:

• January 10 for Ark Invest and 21Shares.
• March 14-15 for BlackRock, Fidelity, VanEck, Bitwise, Wisdomtree, and Invesco & Galaxy.
• March 19 for Valkyrie.
• April 19 for Global X.
• May 30 for Hashdex and Franklin Templeton Investments.
• August 8 for Pando.
• Whilst, the deadline for Grayscale’s proposal has passed and the organization is in direct talks with the SEC.

CPI And PPI Reports Release Next Week

The U.S. Bureau of Labor Statistics will release the December 2023 CPI Report at 8:30 a.m. ET on January 11, 2024. According to Cleveland Fed’s nowcast data, headline CPI is estimated to rise 0.3% month-on-month. While this forecast indicates an uptick from October and November, it aligns with the overall trend of cooling inflation.

It would imply an annualized rate exceeding 4% compared to the Fed’s 2% target, the central bank won’t overanalyze a single monthly CPI report. However, a relatively high December reading might slightly postpone anticipated interest rate cuts in 2024, particularly if the market anticipates a March cut.

Thereafter, on January 12, the PPI report would be released. In November 2023, PPI increased by 0.9%, driven by a 1.5% decline in prices for final demand goods. With the next week’s outcomes, investors are turning their attention to the Federal Committee’s upcoming meeting on January 31.

Recent December monetary policy meeting minutes suggest the Fed is increasingly comfortable with controlled inflation. Moreover, it considers interest rates possibly at their peak for this cycle. On the contrary, Fed officials could propose rate hikes if the CPI or PPI reports indicate an unprecedented increase.

An increase in Fed rates encourages institutional and individual investors to consider more secure assets. This could be a drawback for the crypto market as digital currencies are highly volatile and fail to provide a sense of security. Earlier, after three consecutive Fed rate hikes in 2021 and 2022, the crypto market experienced a massive crash.

Also Read: Bitcoin ETF: Crypto Community Fires Back As Better Markets Opposes Approval