Yesterday might have exposed how vulnerable bitcoin could be to a ‘sell the fact’ trade following the launch of a bitcoin ETF.
Two reports hit:
1) The first was an extremely flimsy analysis piece from a no-name firm speculating that an ETF approval could be submarined because Democrats are running the SEC. That led to a 6% drop.
2) The second was a sourced report from Fox Business that the SEC was meeting with exchanges to finalize ETF filings. “The meetings are seen as a positive sign that the SEC is nearing approval of some or all of the dozen applications by major money managers and crypto firms for the product, according to people at the firms who asked not to be quoted by name,” Fox reported. That report barely led to a bounce.
Today’s price action is cautiously optimistic, with bitcoin up 2.6% but still below when the negative report hit.
I think we should see optimism fuel bids into the weekend with an approval likely to come next week. However if that drags without positive reports suggesting that it’s still coming, then sellers could step in again. What worries me is that many of the buyers in the past six months have been trying to front-run an ETF approval, which certainly sounds like a sure thing to me.
tweet from Bloomberg ETF reporter