Is the BTC ETF approval a "Sell the news" event?

Hi everyone! This is my primer on the potential Bitcoin ETF approval, found in my newsletter.

On Wednesday the SEC is widely expected to accept a number of Bitcoin ETF’s - which would allow stock mark funds to directly access the Digital Gold without having to deal with crypto exchanges. In the run up to this deadline, BTC has seen some volatile action, spiking in either direction amid conflicting reports; (a) On Wednesday 3rd January, Matrixport projected that the SEC would reject all applications - and cautioned traders to hedge long exposure. (b) On Friday 5th January, Bloomberg reported that applicants had cleared a key hurdle and is on path for SEC approval. (c) At pixel time, market sentiment is pointing towards an approval for a Bitcoin ETF.

SCENARIOS:

There are a number of different scenarios that could potentially occur. (1) All 11 applicants receive approval - a “fee war” may ensue, with funds looking to gain market share. (2) All 11 applicants get rejected - previous rejections have occurred on the basis that Crypto is vulnerable to fraud. (3) Some applicants receive approval, whilst others are rejected - some may not have met guidelines.

Note: Scenario summary from WSJ piece found here.

Sell the news event?

With BTC having gained over 50% in the past 6 months (+6%) this past month, many have suggested that the ETF news has been priced in by the markets already - with some analysts pointing towards this being a “sell the news” event. On the other hand, experts have pointed towards favourable technicals alongside strong momentum to support a bullish move post-approval.

My opinion? In terms of the scenarios listed above; (2) would no doubt, be disastrous for Crypto, and would be indicative of a continued lack of confidence in the space. (1) expect volatility to occur in either direction - may well jump on approval and proceed to a marked sell-off, the opposite is also possible. I think the former will occur. (3) offers long-term catalysts for traders - some may see it as “more work to do / more approvals to be optimistic about”.

PIXEL TIME

Ffs! As I wind down for the day with a scroll on Twitter, I find that the SEC X/Twitter account was hacked and subsequently made an announcement that Bitcoin ETF’s were approved. To make clear, this is false, no approval has been made yet. For reference, large Twitter accounts have been running with “ETF rejected” - which is not the case.In an immediate reaction to the initial tweet (which was assumed as fact) Bitcoin jumped from $46.7k to $47.8k; before then paring the entire move dipping to lows of $44.9k after the SEC announced it was hacked. Potentially providing insight into what could actually happen once the formal announcement is made.

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