For the last few weeks, conventional wisdom has forecasted that the highly anticipated, likely imminent approval of a spot Bitcoin ETF in the United States would be a “sell the news” event—or one that, despite its apparently positive impact on Bitcoin, would likely cause the cryptocurrency’s price to fall in the immediate term as traders exited their BTC positions at the crest of ETF hype.
Now, conventional wisdom is changing its tune.
On Tuesday, K33 Research revised its outlook on the matter, saying in a report that a “sell the news” dip in Bitcoin’s price is now less likely—and that BTC is poised to surge once a spot Bitcoin ETF is approved.
That optimism mostly stems from the BTC selloff that occurred last Wednesday when an ominous report from Matrixport regarding the prospect of the Securities and Exchange Commission (SEC) denying all spot Bitcoin ETF applications this month spooked the market. Within hours, BTC plunged over 7%, triggering a wave of liquidations for traders betting long on ETF-related hype.
Analysts at K33 now believe that last week’s dip has actually primed the Bitcoin market to withstand any “sell the news” pressure, if and when a Bitcoin ETF is approved.
“The liquidation cascade on January 3 drastically improved the state of the market,” K33 analysts Anders Helseth and Vetle Lunde wrote. “Last week, we argued that traders would seek to realize profits following the announcement, with snowballing long liquidations adding gasoline to the fire, deepening the selloff. After Wednesday’s squeeze, the impact of long liquidations is less potent.”
With the air potentially cleared by last week’s liquidations, BTC’s price is now poised to rise unfettered on excitement surrounding a spot Bitcoin ETF’s approval.
“Following the deleveraging of last week, the market is more robust to handle profit realization on the ETF announcement,” the report read.
Since last week’s dip, BTC has fully recovered—and then some. The world’s top cryptocurrency is up 10.34% since last Wednesday’s lows, to $46,630 at writing. It rose above $47,000 on Monday and earlier Tuesday; the highest that Bitcoin has climbed since spring of 2022.
Still, K33’s Helseth and Lunde advised vigilance in the days to come, as no outcome is guaranteed. They expect the Bitcoin market to move with particular volatility as definitive news about a Bitcoin ETF emerges.
“If there is one week in 2024 where you should be particularly tuned in, this is it,” they said.
Edited by Andrew Hayward
This news is republished from another source. You can check the original article here
