Bitcoin ETF Drama Reveals Post-Approval Price Trend: Experts

The Bitcoin market was swept into a frenzy following an alleged hack of the US Securities and Exchange Commission’s (SEC) X account, falsely claiming the approval of 11 spot ETFs. This misinformation led to a rollercoaster in Bitcoin’s price, which initially soared from $46,800 to $48,000, only to crash to $45,000 within a span of 20 minutes.

This incident has become a pivotal moment for market analysts, providing insights into how the market might react to today’s potential Bitcoin spot ETF approvals in the short term. So here’s what experts from K33 Research, QCP Capital, and Daan Crypto Trades have to say.

Vetle Lunde, a senior analyst at K33 Research, provided an in-depth analysis of the market’s reaction to the erroneous announcement. He observed that the market’s immediate response was indicative of a tendency towards a ‘sell-the-news’ reaction. The initial surge in Bitcoin’s price was quickly met with a flood of long positions, causing a significant price fluctuation.

“The market showed its hands yesterday; the ETF approval rehearsal favors a sell-the-news reaction. Immediately after the announcement, longs quickly crowded the market, enforcing a whipsaw in the following minutes,” Lunde stated.

Lunde also pointed out that until the SEC’s clarification, the market largely accepted the announcement at face value, triggering an organic reaction. He outlined the sequence of events, noting a 2.4% increase in Bitcoin’s price within four minutes post-announcement, followed by a 1.4% decrease in 14 minutes until Bloomberg debunked the approval news.

The market eventually stabilized when Gensler confirmed the hack, highlighting the market’s sensitivity to regulatory news and rumors.

QCP Capital, in their “QCP Market Update – 10 Jan 24,” reflected on the bizarre nature of the event with a mix of humor and analysis. “We are on the cusp of a BTC Spot ETF approval, and what transpired in the last 24 hours is something you can’t make up,” their update began.

They pointed out the lukewarm initial reaction to the ‘approval,’ suggesting that the market might have already priced in the possibility of an actual ETF approval.

“The initial reaction to the ‘approval’ was muted with BTC being unable to trade out of the resistance area. We take this as a warning sign that an approval is mostly priced in and there may not be a huge rally post the approval,” QCP warned.

QCP Capital also focused on the implications of this event for future market trends. “The restrained response to the faux approval signals a warning – the actual approval of a Bitcoin ETF might not trigger the expected rally,” they observed, also pointing to the current market dynamics, such as the elevated options volatility and spot-futures basis spread. Notably, the firm sees Bitcoin’s next support at $40,000 to $42,000, and resistance around 48.500.

Daan Crypto Trades provided a concise but insightful analysis. “The false ETF approval news was a litmus test for the market’s post-approval direction,” he commented. The analysis highlights the pattern of Bitcoin’s price spiking and then fully retracing following the fake announcement.

“This pattern could well repeat upon actual ETF approval, but with more pronounced selling pressure,” he suggested. Daan Crypto Trades also touched on the broader market implications, especially for the ETH/BTC ratio, which started rallying immediately after the fake announcement.

He further remarked:

ETH/BTC started rallying straight away which is also what we’ve been looking for. I think today we might get one more small spike down on ETH/BTC as BTC spikes up but after that I don’t see much holding back the ETH/BTC ratio anymore. Especially if BTC cools off post ETF.

At press time, BTC traded at $45,346.