A highly expected approval of spot Bitcoin ETFs has dominated the cryptocurrency market narrative in the last months. Investors speculate whether this event could increase the demand for Bitcoin (BTC), positively affecting its price.
Particularly, BTC price surged following two different rumors starting on two consecutive Mondays on October 16 and October 23. The first rumor started after unverified “breaking news” of BlackRock’s ETF approval that proved to be false.
The second happened with another supposed “breaking news” of the ticker of BlackRock’s Bitcoin ETF being added to DTCC’s list — which was later revealed to be there since August 2023.
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Understandably, skepticism and controversy have grown in the crypto community after these “buy the rumor, sell the news” consecutive events regarding the financial giant BTC-based product approval.
In order to gather insights on what to expect next, Finbold asked ChatGPT if the market has already priced in an approval event of Bitcoin spot ETFs.
“What is the expected market capitalization for Bitcoin (BTC) if the Bitcoin spot ETFs get approved by the SEC? Consider public data from October 26, 2023. Bitcoin’s market capitalization is at $666 billion right now, and rumors about this approval have been circulating for months. Is this event already priced in, or should we expect another increase in demand after it happens?”
— Prompt by Finbold
For this experiment, we used a ‘pay-per-prompt’ GPT-4 API built into a Telegram bot that allows payments in cryptocurrencies.
Is a Bitcoin spot ETF approval already priced in by the market?
Interestingly, the ChatGPT bot seems optimistic about an increased demand positively affecting Bitcoin’s market capitalization. The artificial intelligence (AI) believes that BTC investors could see a market cap higher than $673 billion — by the time the prompt was sent.
“If Bitcoin spot ETFs get approved by the SEC, it’s likely we’ll see a significant increase in demand for Bitcoin, leading to an increase in its market capitalization.”
— ChatGPT-4
Nevertheless, the AI also pointed out that changes in price might not be as large as what happens within unexpected events:
“Much might already be priced in due to the rumors and anticipation of this event. This is a common phenomenon in markets known as ‘buy the rumor, sell the news’. However, the extent to which it’s priced in is hard to determine precisely without more exhaustive data.”
— ChatGPT-4
Notably, the bullish case defended by ChatGPT considers the effect of Bitcoin Futures ETF’s approval by the SEC in October 2021, just one month before BTC’s all-time high at $69,000. It is important to say that Bitcoin was already in a bull market at that time, and much was already priced in.
“Actual market capitalization after approval would depend largely on how many investors the ETFs attract and how the broader crypto market reacts. Considering the effect of Bitcoin futures ETFs approval, which led to significant growth, we can expect quite a significant surge. The overall context of the crypto market and macroeconomic factors would also have an impact.”
— ChatGPT-4
Additionally, this post-approval price action has also marked the start of a two-year bear market, with massive sell-offs by institutional investors, Bitcoin miners, and retailers that have accumulated BTC months before, following the new trend.
In summary, artificial intelligence expects an increase in Bitcoin’s market capitalization post-approval, but “quantifying the exact increase is challenging due to various influence factors,” in GPT-4’s words. It believes it is prudent to expect volatility around the time of the announcement, and investors should keep an eye on broader market trends to make decisions.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
