The price of Bitcoin (BTC) should “logically” undergo a correction once spot Bitcoin exchange-traded funds (ETFs) are approved, though commentators also concede that crypto is a “wild card” — and nothing is certain.
Bitcoin has been gaining momentum over the last 11 months, with a sudden jump in March amid banking uncertainty, another spike in June when BlackRock filed for a spot Bitcoin ETF and again in October, similarly due to optimism over spot Bitcoin ETFs.
On Dec. 3, Bitcoin cleared the $40,000 mark, its highest level in 19 months.
Sell the news event
James Edwards, a cryptocurrency analyst at Finder, said that “logically,” the eventual approval of a spot Bitcoin ETF should trigger a “sell the news” event.
“I’d like to say that logically this makes it a sell-the-news type event.”
“Buy the rumor, sell the news” is a phrase that describes a situation where a stock or asset rises ahead of major news or events but falls once the news is confirmed.
The longer #Bitcoin continues to climb towards 50k without an ETF approval the more I think this could be a sell the news event.
— Crypto Caesar™️ (@crypto_caesar1) December 2, 2023
“The idea that this is going to lead to widespread institutional buying on day 1 is a bit too optimistic,” said Edwards, adding it is unlikely fund managers will “ape in the moment it goes live.”
“It could be months – if not years – before we see truly groundbreaking inflows,” he added.
Crypto is a “wild card”
However, many, including Edwards say this doesn’t mean a material correction is on the cards.
Ryan McMillin, the chief investment officer at Merkle Tree admits that while Bitcoin hasn’t seen a correction for over 100 days now — meaning that the risk of correction is rising — the spot Bitcoin ETFs are also the “most hotly anticipated ETF launch ever” and that any sell-off will be quickly brought up.
Meanwhile, CK Zheng, co-founder of cryptocurrency investment firm ZX Squared Capital believes any price pullback will be “shallow.”
“We expect any market pullback will be shallow as the fundamentals for BTC are greater than ever, which include the upcoming BTC halving next year, the massive money printing by global central banks, and the continued geopolitical uncertainty around the world,” he said.
Even Edwards conceded that cryptocurrency is nothing but a “wild card” — and that even when logic dictates a correction to occur, that doesn’t…