Excitement around approval of Bitcoin ETFs is slowly subsiding

23 January 2024 128
Excitement around approval of Bitcoin ETFs is slowly subsiding

Bitcoin prices at yesterday's trading session fell below $40,000 for the first time since early December. Today, the price is holding near this level, but there are still no visible attempts of the bulls to buy back at least a part of the drawdown. Under such circumstances, the main cryptocurrency may continue to decline to $38,000, the highs of November.


The excitement caused by the approval of Bitcoin ETFs in the U.S. is gradually subsiding. As it often happens, traders increased long positions in anticipation of the big event, but after the realization of their expectations they began to take profits. Antoni Trenchev from Nexo also pays attention to the dynamics of the stock market, where the S&P 500 index has recently updated its historical high. According to him, market participants see a greater potential for short-term growth in stocks compared to cryptocurrency.


Orbit CEO Caroline Mauron outlines Bitcoin's pullback after the end of a strong uptrend. The main cryptocurrency has risen by 160% over the past year, including 70% since August, when the first rumors regarding the approval of ETFs in the U.S. appeared. According to Mauron, the 40,000 level is unlikely to trigger a strong surge of Bitcoin buying, she recommends considering the 38,000 level for opening long positions.


In addition to short-term speculators, some outflows from new U.S. ETFs are also contributing to the falling Bitcoin price. According to Bloomberg, investors withdrew $21 million from the cryptocurrency market last week. At the same time, ProShares Bitcoin Strategy ETF, the leading fund in the U.S. market, experienced liquidity outflows of $94 million. The amount is not critical given inflows of over $4 billion in the 2 weeks since the start of 2024, but it is still a sign of cooling sentiment in the cryptocurrency market.


Due to the lack of buyer activity, Bitcoin prices may reach the level of 38,000 in the coming days. This scenario might be canceled if the price returns above the 42,000 level.

 


Consider the following trading strategy:


Sell BTCUSD at the current price. Take profit – 38,000. Stop loss – 42,000.


Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion

This content is for informational purposes only and is not intended to be investing advice.

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