Bitcoin ETFs Begin 2024 With Volatility as SEC Decision Looms

Bitcoin ETFs Begin 2024 With Volatility as SEC Decision Looms

BTC price whipsaws as investors get a likely preview of what’s to come in 2024.

kent
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Research Lead
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Reviewed by: etf.com Staff
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Edited by: James Rubin

Investors wanting to know how bitcoin may perform in 2024 received a taste of volatility in the first trading days of the new year.

As investors awaited a decision from the Securities and Exchange Commission (SEC) on a spot bitcoin ETF, BTC’s price fluctuated wildly as did existing bitcoin ETFs and other crypto-related funds.

BTC concluded 2023 trading at roughly $42,300. But the largest cryptocurrency by market capitalization whipsawed to start 2024, jumping 8% to above 45,800, then dropping 10% to below 42,000 before rebounding midday Wednesday to its Dec. 31 end point.

The largest bitcoin futures ETF, the ProShares Bitcoin Strategy ETF (BITO), is now more than 5% below where it started the year and the crypto-related stock ETF, the Bitwise Crypto Industry Innovators ETF (BITQ), is now off its 2023 year-end price by nearly 3%.

The year’s poor start for capital markets didn’t end with bitcoin, as stocks and bonds both declined. The SPDR S&P 500 ETF Trust (SPY) and the iShares 20+ Year Treasury Bond ETF (TLT) each fell 0.6% Tuesday, which marked the first time both funds have declined that much to begin a calendar year since the bond market proxy began trading in 2002.

Bitcoin Spot ETF Approval, 2024 ‘Halving’ 

As noted in our 24 ETFs for 2024 series, ETFs that invest in crypto-related stocks, including BITQ, and bitcoin miner ETFs, such as the Valkyrie Bitcoin Miners ETF (WGMI), outperformed bitcoin in 2023. This was no easy feat, as BTC jumped by more than 150% in the year.

Most of those price gains came in the final four months, as investor optimism soared that the SEC would approve a long-coveted spot bitcoin ETF. The agency is currently weighing 13 applications from such financial services powerhouses as BlackRock and Fidelity.

The price volatility for BTC, bitcoin futures ETFs and crypto funds to start 2024 stems from a combination of profit taking after 2023’s massive gains and investor doubts that SEC approval will occur by Jan. 10 as Bloomberg ETF analysts Eric Balchunas and James Seyffart have been predicting for weeks. On Wednesday, Markus Thielen, the head of research for crypto services provider Matrixport and a bitcoin bull predicted that the SEC would reject the various applications.

Going forward, investors may expect BTC to jump higher on SEC approval but drop dramatically in the short term if the regulator sends rejection letters, as Thielen maintains, requesting issuers to meet more critical requirements. 
 

Still, bitcoin gains could be in the offing, regardless of the outcome as investors focus on April’s bitcoin “halving” event, in which miners' rewards will decrease from 6.25 BTC to 3.125 BTC, in April. Previous halving events have preceded price gains.

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.