How will the Bitcoin (BTC) market continue after ETFs? - Bithubi (2024)

The top US regulator, the SEC, approved 11 Bitcoin ETFs on January 10. Within a few hours after the positive news was announced, the Bitcoin (BTC) price slowly climbed to $49,000. But BTC later dropped to around $41,000. News of the sales were interpreted by market observers as a sign of decline.

However, people’s opinions about the Bitcoin halving that will take place in April are positive. This article will provide an in-depth interpretation of this.

The significant decline in Bitcoin (BTC) price was interpreted as a correction

The approval of the Spot Bitcoin ETF was hailed as a historic milestone by the media, but the crypto market’s reaction to it was lackluster. Bitcoin (BTC) price started falling two days after approval. This has led many to ponder whether the approval of Bitcoin ETFs is a positive or negative.

According to market data from Gateio, after the spot Bitcoin ETF was approved, the price increased slightly to a maximum of $49,000. Following this rise, BTC began to decline and reached a minimum of $41,422, a decline of over 15 percent. BTC price is trading at the $42,400 level.

According to data from CoinGlass, the day after the sharp drop in crypto prices, more than 100,000 investors in the crypto market sold a total of $342 million in 24 hours.

Bitcoin’s decline not only caused a decline in the crypto market, but also triggered volatility in related stocks. In the US stock market, crypto shares experienced an overall decline in the same period; Marathon Digital is down more than 15 percent, Riot Platforms is down more than 10 percent, MicroStrategy is down more than 9 percent, Canaan Creative is down nearly 9 percent and Coinbase is down more than 7 percent.

Interest rate cut is still unknown and positive news has disappeared

Although the approval of ETFs was long-term positive news compared to Bitcoin, after the news lost its effect, the market entered a short-term decline period with liquidity tension and capital outflows.

In terms of economic information, the December 2023 Producer Price Index (PPI) of the United States increased by 1 percent on an annual basis, below the expectation of 1.3 percent. The previous value was at 0.9 percent. PPI failed to record growth for three consecutive months, recording an unexpected decline of 0.1 percent on a monthly basis. In addition, while the core PPI increased by 1.8 percent on an annual basis, the expectation was 1.9 percent and the previous price was 2 percent.

One day before the PPI data was announced, the US Department of Labor announced that the December 2023 Consumer Price Index (CPI) would increase by 0.3 percent monthly and 3.4 percent annually, exceeding both Wall Street’s expectations and the Federal Reserve’s 2 percent inflation target. He disclosed information showing that it was significantly higher.

This has made it somewhat difficult to expect the Federal Reserve to cut interest rates this year, and the longer the tightening in liquidity policy continues, the more negative it could be for the crypto market.

Additionally, from a cash flow data perspective, the pressure to liquidate Grayscale ETFs (GBTC) and FTX bankruptcies, in addition to short-term speculative funds selling Bitcoin directly for cash out, has also been a valuable driver of this bearish process.

According to the data, on the first day of the issuance of spot Bitcoin ETFs, Grayscale GBTC spot Bitcoin ETFs accounted for almost half of the transaction volume, and there was a capital outflow of $ 579 million in two days of listing.

The market is expected to experience a correction accompanied by volatility: Halving is approaching

The decline that occurred with the approval of spot Bitcoin ETFs was attributed to the “Buy the expectation, sell the news” strategy. The crypto market found it plausible that this strategy had come true.

If we compare the current state of Bitcoin ETFs to the approval process for gold and silver ETFs in the past, we can presumably gain some insight.

Historical data shows that gold prices did not reach a new high with the approval of the gold ETF GLD in November 2014. However, over the next 8 years, the price of gold more than doubled, from the initial $400 to $1,800, and its market value increased from approximately $2 trillion to approximately $10 trillion, an increase of approximately $8 trillion.

According to analysts at McOscillator, there was no clear top in sight for the gold price at the time GLD first went public, but two weeks later the gold price formed a significant peak and was not broken for the next 10 months.

Source: mcoscillator.com

A similar situation occurred in April 2006 when the Silver ETF SLV was listed for the first time. Although the day SLV was approved did not exactly mark the top, the peak was considered a module of the structure and remained at a high level for the following months.

Source: mcoscillator.com

This historical data provides valuable references to compare the current status of Bitcoin ETFs. Although the approval of the Bitcoin ETF may not immediately lead to a new peak in prices, it could become a module of the market structure and have a significant impact on prices in the coming months.

In fact, following the US SEC’s approval of the Bitcoin ETF, investors have been able to participate in the financial performance of the largest, most recognized and leading digital assets in a familiar and easy-to-use format similar to classic stock trading. This structure greatly reduces the technical burden of managing crypto wallets, maintaining private keys, and becoming familiar with crypto exchanges.

Bitcoin ETF has removed barriers to entry for those interested in the Bitcoin market but fearful of the complexity of using cryptocurrencies. It not only provides a more streamlined and streamlined investment channel, but also preserves the dynamism of the Bitcoin market and potential beneficial profits.

According to the views, the approval of Bitcoin ETFs is not only a positive landing, but also creates a relatively solid foundation to prepare for this year’s halving market.

It can be certain that ETFs will bring many changes and impacts to the crypto market. Although there is still some volatility after making profits in the short term, which poses a certain test for short-term investors, we will witness rapid growth of crypto assets in 2024 and beyond for long-term investors.