A new warning has emerged that Bitcoin (BTC) could face difficulties once it becomes the first spot exchange-traded fund (ETF) to be approved in the United States.
in line On November 28 at X (formerly Twitter), Joshua Lim, head of derivatives at capital markets firm Genesis Trading, predicted a volatile start to 2024 for BTC price action.
Bitcoin ETF Approved: Retail Could Be Responsible
Bitcoin is already a target for traditional finance, or “TradFi,” which is betting on a big win in spot ETF approval, Lim said.
The thread explained CME Group’s Bitcoin open interest with data. “We know Tradfi experts/macro tourists are already buying crypto ahead of the ETF news. They have been building positions over the past few months and are now paying significant fees to roll them up,” the thread explains. I did. gift.
“According to trader data showing asset managers have increased length by around $1 billion since the end of September.”
There are signs not only in the performance of the first Bitcoin Futures ETF (BITO), but also in the stocks of cryptocurrency companies such as US exchange Coinbase (COIN). The latter is up 250% since the beginning of the year.
While creating buzz and emboldening talk of institutional adoption behind Bitcoin, the party could nonetheless quickly fizzle out if a spot ETF is actually approved. Lim and others suggest this will be a classic “buy the rumor, sell the news” event.
“What does it all mean?” he asked.
“Tradfi has probably already been thinking about when to exit this transaction for a long time, around the announcement of the ETF. We expect retail to increase and we expect tradfi employees to exit (the highest in 2021 was before the COIN and BITO listings). .”
Gold ETF rerun?
Lim is not alone in wondering whether ETF approval dates will ultimately disadvantage ordinary investors.
Related: ‘Future-Looking’ Bitcoin Indicator Spotlights $48,000 BTC Price Around ETF
answerJames Straten, a research and data analyst at cryptocurrency insights firm CryptoSlate, relayed history to support his concerns.
“When the Gold ETF (GLD) was introduced in November 2004, its market price was around $45, and by May 2005 it had fallen to around $41. However, over the next seven years it showed an impressive 268% increase,” he wrote in a CryptoSlate analysis. added: November 28
In a more optimistic interim note, celebrity trader Jelle said institutional interest was not damaged by this week’s news stories, including the $4.3 billion settlement between the U.S. government and Binance, the largest global cryptocurrency exchange.
He emphasized that CME futures continue to trade at a premium compared to the Bitcoin spot price.
It is interesting to note the accumulation of institutions throughout the courtroom drama. #Bitcoin.
CME currently has a premium of over $350 to the Bitfinex spot price and has continued to trade at a premium for over a month https://t.co/3SAXRnMMRq pic.twitter.com/TAZDm6IABd
— Jelle (@CryptoJelleNL) November 28, 2023
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.