Bitcoin ETF - Should we sell the news?

The SEC’s decision on bitcoin ETFs is imminent. Is this an opportunity to sell the news? Or not…

Bitcoin ETF

BlackRock, Fidelity, and the like have until today to submit last-minute revisions to their Bitcoin ETF applications.

The US Securities and Exchange Commission, on the other hand, has until January 10th to rule on at least one of these ETF applications. Insiders believe the SEC will announce a general green light on this date.

But a letdown is not out of the question. It’s now been 12 years that the SEC has been turning down all ETF applications. However, the pressure is now immense, especially since BlackRock has entered the fray.

A rejection would most likely result in about a 10% drop in bitcoin. This was recently the case after Matrixport strongly suggested that the ETFs would be pushed back (with a 20% drop as consequence).

If on the contrary, there is approval, $30 trillion could be invested in bitcoin. This is the amount managed by all the investment funds eager to launch an ETF.

BlackRock, Fidelity, Grayscale, Ark, Bitwise, Vaneck, WisdomTree, Invesco/Galaxy, Valkyries, Global X, Hashdex, Franklin Templeton.

Note that all these funds will hold the ETF’s bitcoins at the exchange Coinbase (Vaneck at Gemini). Only the Fidelity fund will actually hold its own bitcoins.

Of course, we should not expect all of these $30 trillion to flow into bitcoin. However, an allocation of 2.5% would suffice to double the market capitalization of bitcoin.

A single bitcoin would then be worth close to $100,000. Considering that other American funds might decide to invest in these ETFs. In such conditions, is it wise to “sell the news”?

Some think so… The following tweet shows that shorts are accumulating. In other words, traders are anticipating a SEC rebuff or that traders will sell the news.

Shorts have piled in, expecting a “sell-the-news” event.

Short liquidations will occur in the $44,500 – $45,200 range

Never short #Bitcoin pic.twitter.com/vAVxITr5dY

— CC15Capital 🇺🇸 (@Capital15C) January 7, 2024

CC15Capital believes these shorts will be liquidated as soon as bitcoin enters the $44,500 – $45,200 zone.

For my part, I think it’s extremely risky to play the short term downside on the eve of the arrival of institutional players. Hold and buy the dip!