Bitcoin ETF Approval Could Trigger Sell-the-News Event

Key Points:

• Bitcoin has surged 16% this week, but there is a risk of a sell-the-news event if the SEC approves spot ETFs.
• Technical analysis suggests that the Bitcoin rally may be overextended, but some speculators see the potential to climb to $40,000 before facing resistance.
• Experts have mixed opinions on the potential long-term impact of Bitcoin ETF approval, with some predicting short-term selling pressure and others believing it will positively impact adoption.

With the potential of the Bitcoin ETF approval of the first US, the crypto market has surged. The critical question is whether this approval could trigger a sell-the-news event as investors take profits.

Bitcoin Surges on ETF Hopes, But Sell-the-News Risk Remains

Bitcoin’s value has surged 16% this week, briefly surpassing $35,000 for the first time since 2022. Global stock markets face challenges due to rising Treasury yields and geopolitical uncertainties. Proponents believe that Bitcoin spot ETFs will boost adoption, although approval from the SEC is still uncertain. Recent cryptocurrency incidents like the FTX exchange bankruptcy have impacted mainstream interest.

According to Hayden Hughes from Alpha Impact, markets have already factored in the Bitcoin ETF approval and anticipate a “sell-the-news” response if approved. Technical analysis suggests that the Bitcoin rally may be overextended, but some speculators see the potential to climb to $40,000 before facing resistance. As of Thursday, Bitcoin remained stable at $34,475, experiencing a year-to-date value increase of over 100%. Fibonacci analysis indicates a challenging zone below $36,000, a significant retracement level.

Experts Weigh In on the Potential Impact of Bitcoin ETF Approval

Cici Lu McCalman from Venn Link Partners predicts short-term selling pressure if the US spot Bitcoin ETF is approved but believes it will have a positive long-term impact. The weekly RSI for Bitcoin has exceeded 70, suggesting it may be overbought. Caroline Mauron from OrBit Markets suggests that the ETF approval’s excitement may be driven by bullish factors, such as addressing previous industry excesses and Bitcoin serving as an inflation hedge.

Derivatives data reveals significant bets on Bitcoin reaching $40,000 by the end of the year, indicating a potential 16% gain. JPMorgan Chase & Co. strategists anticipate multiple spot Bitcoin ETF approvals by January 10, but caution against potential legal challenges if they are rejected.

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