Bitcoin price continues to drop! But it’s far from bottoming out!
Tuesday’s Bitcoin price shock didn’t go unnoticed by financial experts, including Fidelity’s Jurrien Timmer. The businessman believes that the current state of the pioneer cryptocurrency is not the worst that can happen in the short to medium term.
In a publication by X, experts believe that there will be significant volatility ahead. Therefore, BTC price is expected to continue falling from the current point. Despite this view, Timmer remains optimistic about the currency and its recent gains.
Their optimism was particularly fueled by the U.S. Securities and Exchange Commission's approval of currency spot ETFs. He explained that huge advances in financial assets are always accompanied by huge fluctuations. Simply put, it suggests that Bitcoin’s citizenship in the financial world is very positive if the horizon is broadened.
On the other hand, his hypothesis is based on the fact that stocks related to Bitcoin and options have already suffered major crashes. Long leveraged positions lost $302 million in 24 hours. Meanwhile, shares of mining companies continued to fall on the stock market despite Monday's gains.
Don't blame the ETFs, 9 new ETFs are BTFD, huge price support $4.4 billion in 8 days, $550 million a day. This is equivalent to 30 times the halving effect. A literal wall of purchase. If anything, weak hands in Bitcoin are under-buying. Buyers of these ETFs are less liquid and rather "cold," such as whale buying and long-term holding.
— Adam Back (@adam3us) January 23, 2024
This is how Bitcoin accumulates in spot ETFs
For the head of Fidelity, the possibility of further Bitcoin price declines is almost certain. In his view, the currency's movements are mixed with the fate of stock market products recently approved by the U.S. Securities and Exchange Commission. In this sense, the currency walks a tightrope between long-term potential and immediate reaction.
From this perspective, it can be said that the typical volatility injected by investors is supplemented by the volatility of institutional investors. It should not be overlooked that institutional investors in Bitcoin ETFs are the most willing to take significant risks.
He said given that ETFs are now a news event, one can assume an increase in price rotation. However, this suggests that this is not an issue to panic about, but rather a shift that will eventually reach equilibrium as the market digests this new addition.
Timmer said the drop in the Goldman Sachs Bitcoin-sensitive stock index is a recalibration rather than a danger signal. Along with the Fidelity chief, other experts also spoke about Tuesday’s sharp drop in Bitcoin prices. Among them, Adam Back is more optimistic, saying that ETFs are "a huge wall of purchasing power."
In fact, the situation looks very negative for buyers who jumped in with the ETF hype.
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