Contrarian bets on Bitcoin (BTC) appear to have been vindicated as the long-awaited approval of a spot exchange-traded fund (ETF) turned out to be a “sell the news” event, something analysts had previously warned was possible given the coin’s rapid price rise over the past few months.
“Sell the news” is a well-known term in capital markets that describes how asset prices, leverage, and sentiment can rise ahead of a bullish event, only to have prices plummet soon afterward.
After briefly hitting a two-year high above $49,000, bitcoin retreated to as low as $41,500 early Monday before rebounding as the first-ever U.S. spot bitcoin ETF began trading last Thursday.
Analysts at Japanese cryptocurrency exchange bitBank told CoinDesk in an email that the approval of a U.S. spot bitcoin ETF is highly anticipated and reasonably priced, so the event could serve as a short- to medium-term top for prices.
“Bitcoin could be vulnerable to profit-taking selling pressure in the near term, but downside risk is likely limited given low Treasury yields and optimism about an early rate cut by the Federal Reserve,” they added.
bitBank said it sees the psychological level of $40,000 as support for Bitcoin prices in the near term. On the other hand, analysts at 10x Research, led by Markus Thielen, said in a report on Monday that they expect prices to find support in the low $38,000s.
Meanwhile, Alex Kuptsikevich, market analyst at FxPro, told CoinDesk in an email on Monday that a correction of at least $40,000 per bitcoin would be “within the range of typical corrections,” considering the cryptocurrency’s price performance in 2023 was over 150%.
Therefore, given the clear demand for ETFs from institutional players (as shown by trading volumes), the long-term outlook for Bitcoin remains fundamentally bullish.
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