Contrarian bets appear to have been proven correct, as the long-awaited approval of a Bitcoin spot exchange-traded fund (ETF) turns out to be a “sell on news” event. Analysts have long warned that this is a possibility given Bitcoin (BTC)’s rapid price rise over the past few months.
“Selling on the news” is a well-known term in capital markets to describe an increase in asset prices, leverage, and sentiment leading up to a bullish event, but then followed by a decline in price.
Temporarily dropped to $41,500
Bitcoin briefly hit a two-year high of over $49,000 (approximately 7,105,000 yen, equivalent to 145 yen to the dollar) after the first US spot ETF started trading on the 11th last week. The price then fell to a low of $41,500 on the morning of the 15th. After that, he recovered.
Analysts at cryptocurrency exchange BitBank wrote in an email to CoinDesk that the approval of a Bitcoin spot ETF in the U.S. was highly anticipated and well-priced, making this event one of the best in the short to medium term. He pointed out that there is a high possibility that the value will be the same.
On the other hand, analysts said, “Bitcoin may be vulnerable to short-term profit-taking selling pressure, but market optimism about lower U.S. Treasury yields and an early Fed interest rate cut” Given the current outlook, the downside risk for Bitcoin may be limited.”
The view is that $40,000 is support.
BitBank said it believes the psychological level of $40,000 will provide support for Bitcoin price in the short term. Analysts at 10x Research, led by Markus Thiele, also said in a note on Monday that they expect the price to find support at $38,000.
Meanwhile, Alex Kuptsikevich, market analyst at FxPro, told CoinDesk in an email on the 15th that given the crypto asset’s price performance of over 150% in 2023, He said the modification to at least $40,000 would be “within typical modifications.”
Bullish for the long term
Thus, long-term expectations for Bitcoin remain mostly bullish, given the clear demand for ETFs among institutional investors as evidenced by trading volumes.
“Bitcoin ETFs will be transformative for the industry, making them significantly more accessible from traditional wealth management,” Henry Robinson, founder of crypto fund Decimal Digital Group, said in an email to CoinDesk. “The launch will bring new investment into Bitcoin from pensions, endowments, insurance companies, sovereign wealth, retirement plans, trusts and more.”
Robinson, however, said: “While the launch of an ETF is exciting, we don’t see any benefit over self-custody. For long-term holders, the fees will effectively erode their position. “However, as Bitcoin adoption increases and self-custody becomes more common among financial institutions, we expect demand for ETFs to decline.”
｜Translation and editing: Rinan Hayashi
｜Image: Mark Basarab/Unsplash
｜Original text: Bitcoin Traders Eye Support at $40K as ETF Contrarian Bets Prove Right