Bitcoin Price Rises Following Franklin Templeton’s Spot ETF Filing

Key Insights:

• Franklin Templeton’s ETF filing pushes Bitcoin over the crucial $26,000 mark, sparking a 5% price hike.
• Regulatory maze intensifies as SEC delays decisions on multiple spot Bitcoin ETF applications from major financial firms.
• Declining Bitcoin reserves on exchanges and liquidation of short positions set the stage for potential further price growth.

Franklin Templeton, the asset management firm with $1.5 trillion under its watch, applied to a spot Bitcoin exchange-traded fund (ETF) on September 12. This filing coincides with a noticeable uptick in Bitcoin’s value, which hit a high of $26,451 per CoinMarketCap data. Consequently, the cryptocurrency surpassed the crucial $26,000 benchmark, reflecting a 5% increase in its price.

Regulatory Hurdles and Pending Decisions

The application by Franklin Templeton follows a series of delays by the United States Securities and Exchange Commission (SEC) regarding similar filings from other financial institutions. These include WisdomTree, Valkyrie, Fidelity, and VanEck. Moreover, a court ruling on August 29 obligated the SEC to consider Grayscale’s application to transition its Bitcoin futures ETF to a spot ETF.

According to the documents submitted, Franklin Templeton plans to create the fund as a trust. Additionally, Coinbase is named as the custodian for Bitcoin, while the Bank of New York Mellon will act as the cash custodian and administrator. The shares are proposed to trade on the Cboe BZX Exchange. The SEC has until October 16 to decide on this application.

In the filing, Franklin Templeton outlined the uncertainties surrounding the regulatory landscape. The firm indicated that changes in legislation or regulation could negatively affect both Bitcoin and the fund’s shares.

CF Benchmarks, a digital asset index provider, would be responsible for the daily valuations, aggregating data from several exchanges like Coinbase and Kraken. The valuations will be indexed at intervals of five minutes.

Factors Influencing Bitcoin’s Current Price

Several elements are contributing to the recent rise in Bitcoin’s value. Firstly, institutional interest is notably increasing. Since a court ruling favored Grayscale on August 29, other large financial entities, such as BlackRock and Fidelity Investments, have also submitted their spot Bitcoin ETF applications, although none have been approved by the SEC yet.

Secondly, data shows that the amount of Bitcoin held on exchanges is decreasing. Since May 1, over 200,000 Bitcoins have been withdrawn from exchanges. This suggests that investors opt for long-term storage, a development generally seen as a positive indicator for the cryptocurrency.

Lastly, the liquidation of short positions also plays a role. In the past day, more than $38.1 million in Bitcoin shorts have been liquidated, with $26.4 million occurring within 12 hours. Currently, 53% of the futures market remains short on Bitcoin, offering a possibility for a short squeeze, which could further influence the cryptocurrency’s price upward.

Despite the recent uptick in Bitcoin’s value following Franklin Templeton’s ETF filing and the liquidation of short positions, the market sentiment remains cautious. The Bitcoin Fear and Greed Index indicates a decline of more than 24 points from last month, signaling continued apprehension among investors.

Bitcoin Fear and Greed Index (Source: Alternative)

As the deadline for the SEC’s decision on Franklin Templeton’s application approaches, attention remains focused on the regulatory body. Whether approval is granted or not, it’s clear that institutional interest in Bitcoin continues to grow.