The price of Bitcoin has soared recently as investors bet on the imminent approval of the first U.S. ETFs offering direct exposure to the cryptocurrency. However, analysts warn this rally may face a "sell-the-news" reaction post-approval.
Key Market Movements
- Bitcoin gained 16% this week, surpassing $35,000 for the first time since 2022
- Global equities declined amid rising Treasury yields and geopolitical tensions
- Year-to-date Bitcoin price more than doubled following 2022's steep decline
The ETF Approval Paradox
Crypto advocates believe spot Bitcoin ETFs by firms like BlackRock will accelerate mainstream adoption. Yet market participants express caution:
"The market has priced in Bitcoin ETF approvals already. I expect a selloff if approval happens," said Hayden Hughes, Co-Founder of Alpha Impact.
👉 Why institutional Bitcoin ETF flows could change the game
Technical Indicators Suggest Caution
1. Fibonacci Resistance Test
The $36,000 zone presents a key challenge—representing the 38.2% Fibonacci retracement level from Bitcoin's 2022 downturn.
| Technical Level | Price Significance |
|---|---|
| 38.2% Fib | $36,000 resistance |
| 50% Fib | $42,000 potential |
2. Overbought RSI Signal
Bitcoin's weekly Relative Strength Index (RSI) crossed 70 for the first time since 2021, indicating overbought conditions that often precede consolidations.
3. Options Market Bets
Deribit data shows concentrated call option positions targeting $40,000 by year-end—16% above current levels.
Expert Perspectives on ETF Impact
Short-term:
Cici Lu McCalman of Venn Link Partners anticipates "near-term selling pressure" post-approval
Long-term:
Caroline Mauron from OrBit Markets cites structural bullish factors:
- Industry cleanup post-2022 excesses
- Renewed inflation hedge narrative
Morgan Stanley strategists predict SEC will approve multiple ETFs by the January 10 deadline, noting: "Any denial would likely trigger lawsuits against the SEC."
FAQs
Q: When might Bitcoin ETF approvals happen?
A: Analysts expect decisions by January 10, 2025—the SEC's final deadline for several applications.
Q: Why would ETF approval cause a price drop?
A: Markets often "buy the rumor, sell the news"—taking profits after anticipated events occur.
Q: What's the $40,000 target based on?
A: Technical factors including Fibonacci extensions and options market positioning.
Q: How does this differ from futures-based ETFs?
A: Spot ETFs hold actual Bitcoin, creating direct buy pressure absent in futures products.
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