Some cryptocurrency industry experts have previously predicted that the market is likely to react to the ETF approval news with a short-term sell-off. Cathie Wood from ARK is one of the prominent personalities of this industry.
The fake news of spot Bitcoin ETF approval on January 9th triggered a sell-off in the market .
On January 9, the official account of the United States Securities and Exchange Commission (SEC) on X posted a fake message. It contained information that the regulator had granted several approvals for Bitcoin ETFs to be listed on registered exchanges . SEC Chairman Gary Gensler subsequently warned on the X platform that the SEC account had been hacked by an unknown attacker and that the agency had not approved any Bitcoin ETF spot products.
According to K33 Research analyst Vetle Lunde, the fake ETF approval news provided a demonstration of how the market could potentially react to real approval news .
“The market got a rough test yesterday… the ETF approval process favors a sell-the-news reaction ,” Lunde wrote on X. The analyst pointed out that in the first 14 minutes after publication, few viewed the SEC’s approval announcement with any suspicion.
“Immediately after the announcement, the market quickly filled long positions , forcing a whipsaw in the following minutes. BTC valuation headed down. The SEC stepped in and bottomed out after the hack was confirmed,” Lunde observed.
The analyst referenced that Bitcoin surged as high as $47,870 in the four minutes following the tweet about the fake endorsement . In the next ten minutes, however, he faced a sharp drop to $46,000 .
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After the approval of the Bitcoin ETF, the “sell-the-news” will most likely come
Some prominent industry executives had previously predicted that the market would likely react to the ETF approval news with a short-term selloff .
Cathie Wood is the founder, CEO and chief investment officer of potential Bitcoin ETF issuer ARK Invest. Woods expects some investors to sell after the news of the ETF approval , as there has been a lot of expected movement in the market around the event.
“That would be very short-term because we think what will happen here is the SEC giving the spot Bitcoin ETF the green light for institutional investor participation,” Wood suggested in late 2023. She further emphasized that the long-term response is promising and more important .
Some analysts and traders agree that the eventual approval of a Bitcoin ETF is unlikely to trigger any subsequent positive market movements . According to analysts at QCP Capital, the potential for the ETF’s approval is “mostly priced in and there may not be a big rally after the approval.”
“Initial reaction to the approval was muted, with BTC failing to trade above resistance , ” QCP wrote.
“This was clearly sell-the-news as the price fell sharply immediately after hitting a new high, ” wrote one trader on X, expressing his belief that today will bring similar price action amid widespread community expectations that the SEC 10 .January will approve several Bitcoin ETFs .
