On the day of ETF approval, is it the time to sell BTC?

Is the Day of ETF Approval a Good Time to Sell BTC?

Source: Bloomberg

Authors: Akshay Chinchalkar, Suvashree Ghosh

Translation: Techub News-Irene

Editor: Techub News-Junge

• NostrAssets Mainnet Launch Bitcoin DeFi Enters a New Era (Includes Airdrop Claiming Tutorial)
• Arbitrum staking proposal sparks controversy Is ARB issuing more?
• Web3 Public Legal Education | Why is it best for blockchain startups to not issue tokens?

• Bitcoin rises 16% as the first US Bitcoin ETF is expected to launch
• Chart data suggests Bitcoin rebound may face some resistance

Bitcoin has surged in recent days due to the expected approval of the first US physically-backed Bitcoin exchange-traded fund (ETF). However, the question now is whether the actual approval of Bitcoin will further stimulate profit-taking.

As the largest digital asset, Bitcoin has risen 16% this week, reaching over $35,000 for the first time since 2022. In contrast, global stock markets have been sluggish due to rising bond yields and deepening geopolitical concerns.

Players in the digital asset space believe that the forthcoming physically-backed ETFs planned by asset management giants like BlackRock will drive broader adoption of Bitcoin. However, cautious approval from the US Securities and Exchange Commission (SEC) is still uncertain. Mainstream demand has also been battered by cryptocurrency crashes, such as the bankruptcy of FTX exchange.

“The market has already priced in the approval of the Bitcoin physically-backed ETF. If it is approved, I expect to see some selling pressure,” said Hayden Hughes, co-founder of the trading platform Alpha ImLianGuaict.

The following chart data shows that the rise of Bitcoin has been overextended. However, option bets indicate that some speculators expect Bitcoin to reach a target of $40,000 before the token stagnates. Bitcoin has already doubled this year following the cryptocurrency crash of 2022. As of 10:14 am on Thursday, October 26, London time, the price of Bitcoin has stabilized at $34,490, while smaller tokens like Ethereum, Avalanche, and Dogecoin continue to rise.

Technical Test

Fibonacci ratios, commonly used to help identify market reversals, indicate that the rebound of Bitcoin will face challenges in the area just below $36,000. This area is defined by the 38.2% Fibonacci retracement, which coincides with the one-year crash in Bitcoin prior to November 2022.

Cici Lu McCalman, Founder of blockchain consulting firm Venn Link LianGuairtners, stated that if the US physically-backed Bitcoin ETF is approved, short-term sell-offs in Bitcoin are expected. However, she added that in the long run, these products will be “bullish” for Bitcoin .

“Overbought” RSI

 

The Bitcoin Relative Strength Index (RSI) has surpassed 70 points for the first time since 2021. An index above 70 is considered “overbought.” This means that the likelihood of a recent sharp rebound, such as two consecutive 10% increases during trading, is low.

“The wild speculation surrounding the imminent approval of an ETF may be a sign of other more structurally bullish factors. For example, a steady cleanup of last year’s industry excesses and the emergence of new narratives around inflation hedging in the macro environment,” said Caroline Mauron, Co-Founder of digital asset derivatives liquidity provider, OrBit Markets.

Derivatives Insights

 

Data from Deribit, the world’s largest cryptocurrency options exchange, shows a significant concentration of bullish bets on Bitcoin, with bets reaching $40,000 by the end of this year. This would be a 16% increase from current levels.

In a report, strategists at Morgan Stanley, including Nikolaos LianGuainigirtzoglou, wrote that they expect the SEC to approve multiple physically-backed Bitcoin ETFs ahead of the final deadline on January 10th. The strategists also believe that “any denial could trigger lawsuits against the SEC and bring more legal troubles to the agency.”

We will continue to update Blocking; if you have any questions or suggestions, please contact us!