Research and analysis agency: China's declining trading market share helps Bitcoin ETF get approved, and the price of the currency can reach more than $1,600 in March

Speculation continues as to whether the Winklevoss brothers’ Bitcoin ETF will be “greenlit” by U.S. regulators. On March 11, the U.S. Securities and Exchange Commission will give a final “yes” or “no” answer to the project, which has been waiting for almost four years.

By that time, two world-class Bitcoin exchanges - Huobi and OKCoin - will have resumed their Bitcoin withdrawal services.

Most commentators are convinced that the first Bitcoin exchange-traded fund (ETF) will probably not be approved. However, their opinions are still divided, and not all agree that a Bitcoin ETF will never be approved. Some believe that the chances of a positive outcome are very high.

So if a Bitcoin ETF is approved, what will it mean for the market?

Approval means +68% return

So far, some notable points are that the chances of a Bitcoin ETF being approved are extremely slim.

On February 10, Needham & Company analysis firm confirmed the company’s previous estimate that the Winklevoss Bitcoin ETF has a less than 25% chance of being approved. However, if it is approved, the analysis firm believes that the Bitcoin ETF will attract $300 million in capital into the market in its first week.

Willy Woo, a cryptocurrency market analyst, similarly puts the probability of approval at about 25%, and predicts that if it passes, between $500 million and $1 billion will be injected into the market.

Emerita Capital, a quantitative analysis and value research company, believes that the probability of approval is 35%, and the final average price of Bitcoin is expected to be $1,645.45, or a +67.8% increase from the current price.

China may be caught off guard

The world’s two top Bitcoin exchanges, Huobi and OKCoin, will resume Bitcoin withdrawal services next month to complete a month-long KYC/AML system upgrade (or possibly complete it earlier), by which time a U.S. Bitcoin ETF may be approved.

According to Spencer Bogart from Needham & Company, the system upgrades being carried out by the two exchanges are helping the Bitcoin ETF get approved because Bitcoin trading is now more evenly distributed around the world . It was previously reported that the U.S. Securities and Exchange Commission would not approve a Bitcoin ETF because China has an absolute dominance in the Bitcoin trading market. Now, with the decline of China's Bitcoin trading market share, the possibility of Bitcoin ETF being approved has increased.

However, given ETFs’ long history of penetrating new and untapped investment sectors, this approval could serve as a reminder to Chinese players that they have failed to gain first-mover advantage in the Bitcoin ETF space. This is crucial, especially now that the latest reports indicate that the People’s Bank of China is eyeing a tightening of monetary policy.

USD Bitcoin Trading Is Dominating the Market

The recent surge in Bitcoin USD trading should also be considered, even before the introduction of a series of regulatory measures on Chinese exchanges, the USD Bitcoin price remained stable at around $1,000 even without the participation of the most prominent Chinese exchanges. When ETFs begin to operate commercially, the early user advantage will further boost USD Bitcoin trading.

Short Bitcoin

Shorting Bitcoin is common, and given that the majority of a Bitcoin ETF’s operations are based on Bitcoin, shorting Bitcoin could be both prevented and made easier.

At the same time, this may also affect the price of the currency. Needham & Company believes that if the ETF is not approved, the price of Bitcoin may decline slightly. Emerita Capital believes that if the ETF is approved, the price of Bitcoin will reach $3,678 in 2017, and if it is rejected, it may decline to $551.