Spot ETF-Induced Bitcoin Rally Not Guaranteed to Stick: Analysts
While the approval of a spot bitcoin (BTC) exchange-traded fund (ETF) could boost the price of Bitcoin, some analysts worry that it may not be enough to completely thaw the markets from the winter freeze.
In the year On Oct. 24, Bitcoin staged its biggest one-day rally in more than a year, rising more than 14% on news that BlackRock's spot Bitcoin ETF — IBTC — was listed on the Depository Trust & Clearing Corporation (DTCC) website, which markets saw as a positive move for the funds' application.
The wave turned out to be even stronger than on October 16, when Cointelegraph's inaccurate X post position suggested the Bitcoin ETF was accepted.
Speaking to Cointelegraph, fake trader TheFlowHorse, who boasts 184,000 followers on X, said that the two market blips can be seen as a hint of Bitcoin price action that should be approved somewhere Bitcoin ETF.
Commenting on the two developments and their impact on Bitcoin, TheFlowHorse added that investors should expect to see “similar, if not greater” movement if the EEF is approved.
However, as TheFlowHorse points out, while the approval could push prices up significantly, it could eventually lead to further improvements in the medium.
That's because, in TheFlowHorse's view, the business is overcrowded by investors chasing the news.
“You're going to have a lot of congestion … and that's ultimately an inefficient move. Ineffective activities will be recharged and returned to some extent,” he added.
Tony Sycamore, an analyst at IG International, told Cointelegraph that he expects to see Bitcoin rise to new highs every year on the day of the announcement, while Rachael Lucas, a technical analyst for Australian crypto exchange BTC markets, confirmed BlackRock's approval. The ETF acts as a catalyst for the rest of the traditional financial sector.
“This involvement not only accentuates the flow of institutional capital, but also increases retail enthusiasm, contributes to limited supply, and highlights the negative aspect of Bitcoin.”
Here's a short clip of @kaileyleinz asking Gensler about $GBTC and the #Bitcoin ETF elsewhere. Not mostly answers in my opinion, but it does speak to the disclosure review team. With some updates from these filers in recent days, we've gotten some insight into their process pic.twitter.com/lIWZc74OAi
— James Seyff (@JSeyff) October 18, 2023
However, while Sycamore says “there's a chance the rally could get stuck,” a complete reversal seems unlikely for Bitcoin, as interest rates are much higher than when Bitcoin hit its previous all-time high.
Tina Teng, an analyst at CMC Markets, also believes that a more cautious stance is worth taking as there is no guarantee that the overall trend will reverse.
“Bitcoin still lacks the fundamentals to support a numerical value like stocks and has no scope for use as a commodity. Approval by the SEC cannot change its nature as a speculative asset.”
“Macro changes will have a big impact on the crypto markets, which often starts to build a reversal trend during the federal rate cut cycle,” concluded Teng.
Related: Bitcoin ETF Gray Files for New Position on NYSE Arca
The certainty and timing of Bitcoin ETF adoption is still up for debate. While unlikely, ETF analysts said U.S. Securities and Exchange Commission Chairman Gary Gensler could wait until the last minute to issue an “incredibly sad” rejection of the upcoming applications.
While JPMorgan analysts said in an Oct. 17 investment note that approval could come in the next few months, the general consensus — according to Bloomberg ETF analysts James Seifert and Eric Balchunas — points to the chances of approval on Jan. 10 next year. by 90%
Over the last couple of weeks I've gotten a lot of questions regarding my view on Spot #Bitcoin ETFs. This is the first part of my memo yesterday with Eric Balchunas.
TLDR: Our view hasn't changed much pic.twitter.com/Htsi3n2XxV
— James Seyff (@JSeyff) October 13, 2023
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