The Approval Of Bitcoin Spot ETFs Didn’t Quite Play Out As Planned

The Approval Of Bitcoin Spot ETFs Didn’t Quite Play Out As Planned
Stéphane Renevier, CFA

30 days ago2 mins

What’s going on here?

The long-awaited approval of bitcoin spot exchange-traded funds (ETFs) didn’t play out as planned, with bitcoin slipping 20% since trading started.

What does this mean?

Crypto’s known as an investing bad boy, full of promise and well-intentioned anarchy, just a little too risqué to bring home. But the recent approval of bitcoin spot ETFs – the “spot” means the fund owns the actual asset – was expected to turn bitcoin into a much more responsible suitor. So far, though, bitcoin has actually dropped 20% since the ETFs’ launch. Mind you, that dip has been made worse by the US dollar’s sudden strength and some big one-off transactions. Plus, it’s not the first time bitcoin’s taken a turn after a major product launch. So there could be a nice guy in there, still: investors’ anticipation was likely already built into bitcoin’s 160% uptick from last year, so the market might just be taking a minute to process the shift.

Bitcoin price, past month
Source: Google Finance

Why should I care?

For markets: Rumor has it.

Many successful traders believe that by the time a trend is grabbing headlines, it’s already reached peak popularity. Makes sense: if enough investors have bought in to justify media attention, there will be limited prospective buyers still on the sidelines. No wonder, then, that an investment’s price often plateaus or slides after the initial furor. That’s why traders talk about buying the rumor and selling the news: if you’re sharp enough to spot emerging trends, the tactic should see you cash in from the momentum before it dissipates.

Bitcoin price, past year
Source: Google Finance

The bigger picture: Hodl round.

Crypto investors are usually in it for the long haul. They don’t just want short-term diversification: they believe in a bonafide future for decentralized financial systems. Regulation and more mainstream appeal only bode well for that ambition, so the case for “holding on for dear life” is arguably stronger than ever – if you can handle some whiplash along the way, that is.

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