[EN] ETF BTC: sell with the news! // GaliortiTrading
There are two big and very famous sayings in equities:
1. "the market is never generous": things are not what they seem and logic does not usually work. Nobody gives money away.
2. "buy on the rumor and sell on the news". Markets are anarchic and are driven, among other things, by expectations.
The recent history of
BTCUSDT
is plagued by the latter phenomenon:
1. Three Arrows Capital collapses
The second quarter of 2022 was a major correction in the cryptocurrency ecosystem. Rumors about mismatches in the real assets of most exchanges (including the most important ones) raised concerns about a possible Ponzi scheme. Also, many Altcoins had had spectacular revaluations (bubbles) that were not sustainable over time.
Contrary to common sense, when the rumors came true, the news ofThree Arrows Capital's bankruptcy became known, Bitcoin stopped falling and experienced a counter-trend rally of 43%, which is nothing for a fearful market.
2. FTX collapses
After the collapse of Luna Terra, BTC restarts again, in the summer of 2022, its downward trend. New collapses of small platforms and rumors of problems with FTX assets set off alarm bells again. New lows are reached again in November just with the news of FTX's bankruptcy.
At that time BTC changes its medium-term trend and experiences a 66% counter-trend rally.
3. Approval of BTC Futures to Coinbase
Since the summer of this year, there has been a rumor that BTC Futures will be approved for the Coinbase platform sooner rather than later. The application of different fund managers for authorization to the SEC to trade ETFs also generates expectations of revaluation in BTC. Surprisingly the week that the news of Coinbase's approval to market these futures is heard, BTC plummets counter-trend by 15%.
4. Possible approval of one or more BTC spot ETFs
The SEC will have to decide on its approval before the end of January 2024. It could probably do so during this Christmas season.
If we look at a chart of BTC in weeks we will observe that it is starting to border on overbought levels. It is more than likely that BTC will reach its liquidity zone of $40-42,000. The rumor of approval sounds persistent but this current rally could be a great bull trap for retailers.
All small investors mistakenly believe that billions of dollars will be pouring into the asset from a multitude of funds and institutional managers following the approval news. Nothing could be further from the truth:
- all the managers that have applied for ETF approval have been bought for many months now. The vast majority of the final position has already been bought.
- funds that want to position themselves for the first time in the ecosystem: why would they do it at $42,000 when they can do it at $32,000?
- Probably the largest volume of inflows into bitcoin, in this last stage of the trend, corresponds to the retailer. It is the easiest to catch and to drive out of the market. The latest buying capitulation is more than likely to trigger a gigantic short position that has not been seen for many years. This position will make it even cheaper for large institutional players to enter the ecosystem.
Good advice: BE CAREFUL NOT TO GET TRAPPED IN THE CURRENT RALLY WHEN THE NEWS IS CONFIRMED!
Pablo G.
1. "the market is never generous": things are not what they seem and logic does not usually work. Nobody gives money away.
2. "buy on the rumor and sell on the news". Markets are anarchic and are driven, among other things, by expectations.
The recent history of
BTCUSDT
is plagued by the latter phenomenon: 1. Three Arrows Capital collapses
The second quarter of 2022 was a major correction in the cryptocurrency ecosystem. Rumors about mismatches in the real assets of most exchanges (including the most important ones) raised concerns about a possible Ponzi scheme. Also, many Altcoins had had spectacular revaluations (bubbles) that were not sustainable over time.
Contrary to common sense, when the rumors came true, the news ofThree Arrows Capital's bankruptcy became known, Bitcoin stopped falling and experienced a counter-trend rally of 43%, which is nothing for a fearful market.
2. FTX collapses
After the collapse of Luna Terra, BTC restarts again, in the summer of 2022, its downward trend. New collapses of small platforms and rumors of problems with FTX assets set off alarm bells again. New lows are reached again in November just with the news of FTX's bankruptcy.
At that time BTC changes its medium-term trend and experiences a 66% counter-trend rally.
3. Approval of BTC Futures to Coinbase
Since the summer of this year, there has been a rumor that BTC Futures will be approved for the Coinbase platform sooner rather than later. The application of different fund managers for authorization to the SEC to trade ETFs also generates expectations of revaluation in BTC. Surprisingly the week that the news of Coinbase's approval to market these futures is heard, BTC plummets counter-trend by 15%.
4. Possible approval of one or more BTC spot ETFs
The SEC will have to decide on its approval before the end of January 2024. It could probably do so during this Christmas season.
If we look at a chart of BTC in weeks we will observe that it is starting to border on overbought levels. It is more than likely that BTC will reach its liquidity zone of $40-42,000. The rumor of approval sounds persistent but this current rally could be a great bull trap for retailers.
All small investors mistakenly believe that billions of dollars will be pouring into the asset from a multitude of funds and institutional managers following the approval news. Nothing could be further from the truth:
- all the managers that have applied for ETF approval have been bought for many months now. The vast majority of the final position has already been bought.
- funds that want to position themselves for the first time in the ecosystem: why would they do it at $42,000 when they can do it at $32,000?
- Probably the largest volume of inflows into bitcoin, in this last stage of the trend, corresponds to the retailer. It is the easiest to catch and to drive out of the market. The latest buying capitulation is more than likely to trigger a gigantic short position that has not been seen for many years. This position will make it even cheaper for large institutional players to enter the ecosystem.
Good advice: BE CAREFUL NOT TO GET TRAPPED IN THE CURRENT RALLY WHEN THE NEWS IS CONFIRMED!
Pablo G.