As Bitcoin continues its positive trajectory throughout 2023, hovering around $41,400 at the time of this writing, the cryptocurrency realm awaits the approval of spot exchange-traded funds (ETFs). While optimism mounts that the approvals could send Bitcoin’s price even higher, some analysts predict the long-awaited news could actually trigger a correction.
“Logically, this makes it a sell-the-news type event,” said James Edwards, a cryptocurrency analyst at Finder. The common trading wisdom is that assets often decline in value shortly after major anticipated news finally materializes, as investors who bought in anticipation of the event decide to take their profits.
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However, as trader Caesar put it in a recent tweet, “The longer Bitcoin continues to climb towards 50k without an ETF approval the more I think this could be a sell the news event.”
Can Bitcoin sustain its momentum?
Bitcoin has jumped at various points over the last year amid optimism around spot ETFs. With Bitcoin already up 5% in the last 24 hours and having gained ground for most of 2023 so far, an approval may have already been priced in to some extent.
On the other hand, quant researcher Samneet Chepal argues a strong basis in the trade market indicates there could be more room to run. With futures trading at a 10% premium to the spot price, close to 2023 highs, the potential returns are far outpacing benchmarks like the 4.2% yield on 10-year Treasuries.
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“This could be just the beginning,” Chepal said, noting the numbers could “potentially surpass previous cycle highs” if Bitcoin keeps climbing ahead of anticipated ETF approvals in early 2023. Of course, as a famously volatile asset, Bitcoin is something of a “wild card,” and it is tricky to predict whether Bitcoin ETF approval could be a sell-the-news event.