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Spot Bitcoin ETF Launch Triggers ‘Sell-the-News’ Event

2024.01.16

 

Key Takeaways

  • Bitcoin’s price drops after the launch of U.S. spot bitcoin ETFs.
  • Long-term outlook for Bitcoin remains bullish despite short-term volatility.

Bitcoin’s Response to Spot ETF Launch

The launch of the first-ever spot bitcoin exchange-traded funds (ETFs) in the U.S. led to a significant market event, confirming the predictions of some analysts. The phenomenon, known as “sell the news,” saw Bitcoin’s price retracting after reaching a two-year high above $49,000. The token’s price pulled back to around $41,500 early Monday, illustrating the volatility and market sensitivity to major developments like the introduction of spot bitcoin ETFs.

Market Dynamics Post-ETF Approval

Analysts had anticipated this market behavior, noting that the approval of spot bitcoin ETFs was highly expected and already factored into Bitcoin’s price. According to crypto exchange bitBank, the launch of these ETFs likely marked a short- to mid-term peak for Bitcoin’s price. However, the analysts also highlighted that Bitcoin’s downside risk might be limited due to lower U.S. treasury yields and optimistic market outlook for the Federal Reserve’s early rate cuts.

Support Levels and Market Analysis

bitBank identified the $40,000 mark as a psychological support level for Bitcoin in the near term. Similarly, analysts at 10x Research, led by Markus Thielen, suggested that Bitcoin prices could find support even lower, at around $38,000. FxPro market analyst Alex Kuptsikevich echoed these sentiments, stating that a correction to $40,000 would be typical given Bitcoin’s impressive price performance over 2023.

Long-Term Bullish Outlook for Bitcoin

Despite this short-term volatility, the long-term expectations for Bitcoin remain optimistic. The demand for ETFs, particularly from institutional investors, is a positive indicator. Henry Robinson, founder of crypto fund Decimal Digital Group, emphasized the transformative impact of Bitcoin ETFs for the industry. He predicted new investments in Bitcoin from a diverse range of traditional wealth management sectors due to the ETF launch.

The Future of Bitcoin ETFs and Self-Custody

While the launch of Bitcoin ETFs is a milestone, some experts, like Robinson, believe they offer no significant advantage over self-custody. He pointed out that for long-term holders, the fees associated with ETFs could significantly erode their positions. As Bitcoin adoption increases and self-custody becomes more prevalent among institutions, the demand for ETFs may gradually decrease.

 


More content from CoinRank:

Spot Bitcoin ETFs May Draw Funds from Existing Crypto Products

Bitcoin Miners Face Downturn as Cryptocurrency Retreats After It Temporarily Reaches $49,000

Ark Invest Launches Low-Fee Bitcoin ETF, Aiming Accessibility

 

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