The world's bitcoin traders are getting ready for this week's decision by the US Securities and Exchange Commission on an exchange-traded fund (ETF) tied to the digital currency.
The agency is expected to make its decision by Friday. Specifically, the SEC is considering a proposed rule change by the Bats Global Exchange that would clear the way for it to list the bitcoin ETF sought by investors Tyler and Cameron Winklevoss.
In the meantime, traders are preparing for what's to come - a process that, according to some in the market, means gearing up for the expected volatility that might follow, regardless of the SEC's choice.
Joe Lee, co-founder of leveraged bitcoin trading platform Magnr, told CoinDesk:
"We're anticipating a lot of volatility and trading activity around the time of the ETF announcement."
Investor and entrepreneur Vinny Lingham argued that while there's little indication as to which direction the agency go, the potential for volatility is virtually guaranteed.
"Volatility is coming back after the decision is made," said Lingham.
Preparing for the storm
Lingham certainly wasn't alone in articulating this point of view.
CryptoCompare founder Charles Hayter told CoinDesk that, from his perspective, overall volume should climb as well.
"We expect volatility to increase and volumes too across all markets," he said.
Magnr's Lee similarly speculated that volumes could climb. He said that trading platform employees are doing what they can on their side to prepare for the decision's impact. Specifically, he said that staff will be on-hand to resolve any potential issues that may result in the expected increase in trade activity.
"It's mostly business as usual, but with more hands on deck to ensure all of our trades go through as expected," he said. "We'll be monitoring the situation closely either way to ensure our clients get a smooth trading experience."
Many market analysts have asserted that traders have already priced in the ETF's chance of receiving approval, a development that has coincided with bitcoin's price repeatedly nearing $1,300 in recent sessions. After reaching these lofty levels, some have warned that prices could potentially suffer a pullback if the agency opts to reject this proposed fund.
Prepare for the worst?
While many traders indicated that they have braced themselves for volatility, some revealed they have specific plans in case bitcoin prices plunge following the SEC's decision.
At least one market trader has suggested that they are getting ready for the worst-case scenario: a "no" decision, followed by a sharp drop.
Tim Enneking, chairman of Crypto Asset Management, told CoinDesk that his team is planning to react accordingly should the situation play out in that way.
"We're going to position ourselves to go short, perhaps massively so, if the market looks as if it's going to drop significantly based on a negative SEC decision," he explained.
Cryptocurrency fund manager Jacob Eliosoff took a somewhat different point of view, suggesting that he would look for opportunities amidst any possible price decline.
"I'm waiting to do some buying on any major dip - I don't think we've seen the last of $1,000," said Eliosoff.
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