Predicting the Approval Time for Bitcoin Spot ETF and the Starting Point of the Next Bull Run

This article consolidates predictions about the approval timing of the Bitcoin Spot ETF and the analysis of the potential bull run it may trigger. The content is lengthy, so for ease of reading, the conclusion is placed at the beginning.

1. Predictions for ETF Approval and Bull Run Start Time

Based on the approval process of relevant trust funds in the previous round, the most likely situation is:

1. Approval of Bitcoin Spot ETF application in January 2024 ( assuming the Federal Reserve pauses interest rate hikes )
2. The ETF officially takes effect in April 2024, coinciding with the Bitcoin halving, which is beneficial for attracting funds (.
3. The Bitcoin bull run officially starts in July 2024 ) after experiencing adjustments and expectations of loose policies following the halving (
4. The Federal Reserve will begin its interest rate cut cycle in September 2024. The risk market usually reacts 1-2 months in advance.

It is expected that the bull run will start in July rather than when the ETF takes effect, because there is usually a 2-3 month adjustment period after the halving. Considering the current macro environment and expectations of interest rate cuts, the timing is set for around July.

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2. Review of the 2020 bull run starting point

Important milestones of the bull run in 2020:

• November 2019: A trust submitted a registration application to the SEC
• January 2020: The trust was approved for registration by the SEC.
• April 2020: Trust officially took effect, scale rapidly expanded
• In 2020, the trust brought approximately $10 billion in incremental funds to the market, with the total market increment potentially reaching the trillion level.

At that time, the premium rate of the trust's secondary market once reached over 30%. As of February 2021, it held 654,885 BTC, with an estimated cost of about $8.931 billion, and an average cost of only $13,700.

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3. Possible Starting Point and Incremental Capital of This Bull Run

In 2020, 10 billion dollars brought about a trillion-level increase in funds, and in 2021, the total market value of the crypto market reached a maximum of 3 trillion, which was about 30 times higher than in 2019.

According to similar growth rates, this bull run requires an increase of over 100 billion in funds. The approval of a Bitcoin ETF by a large asset management company can be seen as a necessary condition for the next bull run, with approximately six months needed from application to effectiveness.

It is expected that the ETF will bring over $25.5 billion in incremental funds to the market. However, a true bull run still requires ample market liquidity. After the ETF is approved, it may bring hundreds of billions in liquidity to the crypto market, increasing the total market value by at least a trillion level, and is expected to surpass the current highest market value company.

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4. Three Necessary Conditions for the Next Bull Run Starting Point

1. SEC approves Spot Bitcoin ETF
2. The next Bitcoin halving
3. Monetary easing, ample market liquidity

5. Market Performance Prediction After ETF Approval

Referring to the historical experience of gold ETF approvals, the approval of Bitcoin ETF may encounter the following situations:

1. The market continues to have optimistic expectations before ETF approval.
2. After formal approval, there will still be a slight increase in the short term.
3. Shortly after the ETF starts trading, it may peak and then pull back, or even drop below the price prior to approval.

Rational analysis suggests that the approval of ETFs may not necessarily trigger a bull run. The current economy has not fully recovered, and monetary policy remains tight, making continued capital inflow difficult. It may maintain high-level fluctuations, but it is hard to sustain, and the probability of an independent market in the crypto space is very small. The impact of major positive news during a bear market is also limited.

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6. Review of the Approval Process for Gold ETFs

• March 2003: The world's first gold ETF was launched in Australia.
• October 2004: SEC approves the first gold ETF in the United States
• November 2004: The US Gold ETF officially began trading

At that time, the US economy was relatively stable, with GDP growth, low unemployment, and moderate inflation. The Federal Reserve's monetary policy was relatively loose; although rates were gradually increasing, they remained low, providing support for gold performance.

Performance of gold ETF after approval:

1. The first ETF surged significantly after approval, until the US ETF began trading.
2. The US ETF has slightly surged after approval.
3. After the American ETF started trading, it fell about 9% within two months, dropping below the price at the time of approval.

Gold ETFs allow more investors to participate conveniently without the need for physical custody. In the following years, more funds entered, and the 2008 financial crisis drove gold above $1000.

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7. Development History of Bitcoin ETF

• February 2021: The world's first Bitcoin ETF was approved in Canada, and within two months, BTC surged to $65,000 before falling back.
• October 2021: The first Bitcoin futures ETF in the United States was listed, and within a month BTC surged to $69,000 before starting a long-term decline.
• July 2023: A top global asset management company applied for a Bitcoin Spot ETF, and BTC reached a high of $31,800 that month before pulling back.

8. Current Economic Environment and Monetary Policy

• Economic Environment: The macroeconomic situation in the United States in 2023 is unstable, experiencing a banking crisis. Inflation is high, GDP growth is weak, the unemployment rate is relatively low, but there is an inversion of short-term and long-term Treasury yields, facing economic challenges.
• Monetary Policy: In 2023, the Federal Reserve continues to raise interest rates and reduce its balance sheet, remaining in a tightening cycle. To curb inflation, aggressive rate hikes have been implemented, with rates reaching 5.25%. The rate hikes may be nearing their end. The market anticipates that interest rate cuts will begin in September 2024.

The approval of the Bitcoin Spot ETF will allow tens of millions of new investors to participate easily, enhancing the legitimacy of Bitcoin and is expected to attract more funds into the market in the long term.

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