As Bitcoin eagerly awaits the launch of ETFs, investors brace themselves for a potential reality check, as the market could witness a ‘sell-the-news’ pivot, challenging the cryptocurrency’s stability and resilience.
Bitcoin is experiencing a surge in value due to speculation that the first US exchange-traded funds (ETFs) investing directly in the cryptocurrency will be approved. However, there are concerns that once the ETFs are approved, there may be a sell-off in the market. Despite this, supporters argue that the ETFs will encourage wider adoption of Bitcoin. The approval timing from the Securities and Exchange Commission remains uncertain, and recent crypto blowups have also impacted mainstream demand.
Technical chart patterns suggest that the Bitcoin rally may be reaching its limit, and options bets indicate that some speculators see a potential for the token to reach $40,000 before stalling. Fibonacci ratios, which are used to identify market reversals, indicate that the Bitcoin bounce may face a challenge just below $36,000.
If the US spot Bitcoin ETFs are approved, it is expected that there will be short-term selling, but the overall sentiment is bullish for the token in the long term. Bitcoin’s weekly relative-strength index, a momentum gauge, has reached a level not seen since 2021, suggesting reduced odds for further rapid rallies.
Derivatives data from Deribit, the largest crypto options exchange, show a significant concentration of bullish bets on Bitcoin reaching $40,000 by the end of the year. JPMorgan Chase & Co. strategists predict that the SEC will approve multiple spot Bitcoin ETFs by a January 10 deadline. However, they also warn that any rejection could lead to lawsuits against the SEC.
Overall, the approval of US spot Bitcoin ETFs is causing speculation and excitement in the market. While there may be some profit-taking once the ETFs are approved, many believe that the long-term outlook for Bitcoin remains positive.
