The price volatility of Bitcoin often correlates with market news, whether bullish or bearish, as investors and the community quickly react to even minor developments, sparking brief rallies. One such recent episode was the fervor surrounding Franklin Templeton’s filed spot Bitcoin Exchange-Traded Fund (ETF) with the SEC. However, much like previous crowd hype around ETF news, the initial social domination declined, as revealed by on-chain metrics.
Franklin’s Social Volume Spiked, Mirroring The BlackRock ETF Crowd
Franklin Templeton, an asset manager overseeing $1.5 trillion, submitted a filing to the U.S. Securities and Exchange Commission (SEC) to join the expanding roster of asset managers looking to introduce a spot Bitcoin ETF.
Dubbed the Franklin Bitcoin ETF, the planned fund is set to primarily consist of Bitcoin holdings. To guarantee the secure storage of these digital assets, the firm has entered into a partnership with Coinbase Custody Trust Company, as confirmed in an S-1 form submitted earlier this week.
After the announcement, Bitcoin’s price experienced a notable uptick, rising from $25K as investors aimed to capitalize on a potential major rally. On-chain analytics company Santiment reported a quick increase in social volume for Franklin following the news, sending Bitcoin’s price to a peak of $26.5K. The firm observed that this surge mirrored the social volume spike that occurred when BlackRock submitted its Bitcoin ETF filing amidst similar investor enthusiasm in the ETF space.
As social media platforms were filled with hashtags like #ETF and #FranklinTempleton, the FOMO sentiment continued to rise, leading to a surge in selling pressure near the resistance level. As a result, within a matter of hours, the buzz died down, and the market returned to its usual volatility.
One reason could be the market’s tendency to overreact to news, especially when it comes to cryptocurrency. The initial surge of interest often leads to inflated prices, which are unsustainable in the long run. As more rational assessments come into play, the market corrects itself, leading to a decline in interest and, subsequently, prices.
Santiment said, “ETFs should benefit crypto in the long term. But beware of initial overreactions when this kind of news first goes mainstream.”
Bitcoin Waits For SEC’s Response In October
Despite the quick cool-off, it’s essential to understand that ETFs like the one proposed by Franklin Templeton are beneficial for the crypto market in the long term. They offer a more accessible entry point for traditional investors, add a layer of legitimacy to the crypto space, and can lead to increased liquidity.
Several institutional firms, including BlackRock and Fidelity, have filed applications to launch spot Bitcoin ETFs. In addition, ARK and 21Shares have announced intentions to introduce an Exchange-Traded Fund (ETF) focused on Ethereum, the cryptocurrency with the second-largest market cap.
Earlier, the U.S. Securities and Exchange Commission (SEC) extended the evaluation period for the six Bitcoin Spot ETF applications currently on its docket. A new decision deadline has been set for October 17, 2023, although the regulatory agency has not disclosed the specific rationale behind the delay.
According to senior Bloomberg ETF analysts Eric Balchunas and James Seyffart, the likelihood of Spot Bitcoin ETFs gaining approval this year has risen substantially to a noteworthy 75%. They also forecast an impressive 95% probability of approval by the end of 2024.
Following Grayscale’s recent legal victory over the SEC, which mandated the regulatory body to reconsider its rejection of a Spot Bitcoin ETF application, the odds of such an ETF receiving approval this year have markedly improved.