• Window for spot BTC ETFs is barely a week out from opening, between January 5 and 10, ETF experts say.
  • The market has cooled off ahead of 2024, with traders exercising caution evidenced by the dwindling trading volume.
  • Concerns over a sell-the-news situation playing out post-expected approval continue to brew, reinvigorating investor caution.

Exchange-traded funds (ETFs) specialists with Bloomberg Intelligence James Seyffart and Eric Balchunas hold firm to their 90% odds of an approval coming between the January 5-10 window in 2024. In anticipation for this event, which is expected to bring billions of dollars into the crypto space, volatility soared in the market over the past months. However, as the calendar date closes in, speculation of a sell the news event has traders and investors on ‘safety-first’ mode, with trading volumes dwindling in the BTC market as attention turns to altcoins.

Also Read: Bitcoin ETF news and five most asked questions regarding spot ETF approval

Sell the news event after buying the rumor

Buy the rumor sell the news is a popular narrative in the crypto and trading scenes in general, and often proves accurate. It defines a contrarian trading strategy “predicated on anticipating market reactions to rumors and news announcements,” according to Liberated stock trader insights.

With investors looking to capitalize on price movements, they act before the masses widely distribute or spread and process the information. The action, which is essentially buying, pumps the asset’s price, putting them at a profit when they decide to sell on the news.

Towards the last half of 2023, the cryptocurrency market witnessed multiple price surges with Bitcoin (BTC) recording significant moves. This came on the back of rumors about the imminent approval of a spot Bitcoin ETF, which were subsequently delayed. Nevertheless, the pattern fueled anxiety among traders and investors.

The anticipation and potential approval has clearly resulted in buying enthusiasm, with markets turning bullish beginning around October 18. X user Credibull Crypto called this, “buy the rumor, buy the news event.”

Nevertheless, there is also support for the possibility of a sell-off post-approval. This argument draws inspiration from the fact that ETFs must purchase BTC with cash, and there being no option to repurpose existing Bitcoin holdings.

Possibility of a sell the news event in case of spot ETF approval 

With expectation of intense competition among the prospective issuers to become the ETF with the most liquidity, there could present a situation where the filers expedite purchases, same case for retail investors, in a fear-of-missing-out (FOMO) situation.

With investors and traders in the market, the former buys and hodls while the latter trades short term using leverage through futures and options to play themes. ETFs are one such theme.

With this, January 5 to 10 or more accurately, the announcement day, is expected to be a liquidity event. This means many short-term traders will be looking to use it to exit in size. Considering many traders are leveraged, it should not come as a surprise if their size (exit liquidity) could be large short term, with the ensuing selling pressure pushing prices down as these short-term traders exit the market.

Nevertheless, with traders out, the market will be left with investors coming to ride the bullishness that the ETF promises. This is because of capital inflow into the market as the institutions buy BTC. Specifically, the institutions will have the freedom to capitalize on institutional money looking for exposure to BTC, which already provides counter-exposure to the continually debased US Dollar (USD).

As such, the possible approval news giving large firms the go-ahead to market Bitcoin ETFs would allow financial advisors to finally get their clients some exposure. With demand present, prices are bound to go up.

Meanwhile, it is impossible to ignore the fact that pumpers have gone quiet of late, evidenced by the lull in the BTC market, so much so that Bitcoin price has been unable to overcome a weekly supply zone.  

Amid fears of the sell-the-news situation, attention has shifted to altcoins, with Ethereum taking the lead, possibly because of the assumption that when BTC ETF is confirmed, the ETH ETF will certainly follow.

This explains the capital outflow from the Solana (SOL) market to the Ether market. 

Also Read: Bitcoin Weekly Forecast: BTC coils up for one last buy opportunity before potential 2024 spot ETF rush


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Bitcoin Price Forecast: Analysts anticipate increased volatility as the US presidential election looms

Bitcoin Price Forecast: Analysts anticipate increased volatility as the US presidential election looms

Bitcoin price teased its all-time high of $73,777 last week but declined to trade below $69,000 on Monday. Analysts suggest that market volatility is expected to rise as the US presidential election approaches.

More Bitcoin News
Litecoin poised for double-digit decline after breaking ascending trendline

Litecoin poised for double-digit decline after breaking ascending trendline

Litecoin breaks and closes below an ascending trendline, signaling a change in market structure. On-chain metrics paint a bearish picture, as LTC’s dormant wallets are active, and the NPL indicator shows a negative spike.

More Litecoin News
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP decline ahead of US elections

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP decline ahead of US elections

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) all faced resistance at crucial levels ahead of the US Elections, leading to a price decline. As of Monday, they neared key support levels, and a firm close below these marks could signal further declines.

More Cryptocurrencies News
21Shares files S-1 for XRP ETF amid ongoing tension between Ripple and SEC

21Shares files S-1 for XRP ETF amid ongoing tension between Ripple and SEC

21Shares filed an S-1 registration with the Securities and Exchange Commission (SEC) on Friday for an XRP exchange-traded fund (ETF). While the chance of approval is slim with the current SEC administration, the landscape could change after the upcoming elections.

More Cryptocurrencies News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP