A recent Bloomberg report featured the opinions of regulatory analysts who believe that the United States Securities and Exchange Commission could be getting closer to approving one of many applications for a Bitcoin exchange-traded fund. The publication of this report resulted in an uptick of Bitcoin prices, and it also prompted speculation among options traders about how they should prepare for such a significant fundamental development.
Many options traders see Bitcoin as a great buy-the-dip call or sell-the-dip put, and they also expect that regulatory approval would be a catalyst for the price to go higher. Many options traders are excited about this move because of how it could create a greater demand for futures and options, and they believe that this greater demand could create significant price volatility when it occurs.
In addition to a Bitcoin exchange-traded fund being approved, a lot of volatility is also associated with the recent news that the Winklevoss twins and Fortress Investment Group had filed for an amended Bitcoin ETF application with the SEC. This development was followed closely by a number of other major news stories related to Bitcoin, which was a significant event for the cryptocurrency. Such stories include: the SEC’s previous rejection of an ETF from Winklevoss; the Winklevoss twins being involved with another cryptocurrency known as XRP; and a Bitcoin ETF being proposed by the Horizons Fund, which is a fund run by Tiger Management. The result was a significant uptick in prices, and many traders are eager to see how it could affect the stock market when the SEC votes on a decision about a Bitcoin ETF.
There is an entire category of people who are bullish about Bitcoin, and there is also a large group of people who are bearish. Things could go either way for these traders, many of whom think that an approval is just a matter of time. This is the key aspect of the Bloomberg report; what really matters is exactly when the approval comes because traders just want to get in early and exit their positions at the right time.