Why Bitcoin ETF approval could spark profit taking
Bitcoin has jumped on bets that the first US exchange-traded funds investing directly in the token are set to be approved. The question now is whether an actual green light for the products would spur some profit-taking.
The largest digital asset is up 16% this week and at one point topped $35,000 for the first time since 2022. In contrast, global stocks are wilting under elevated Treasury yields and deepening geopolitical gloom.
Digital-asset fans argue the spot ETFs planned by the likes of BlackRock Inc. will spur wider Bitcoin adoption. But the timing of any approval from a wary Securities and Exchange Commission remains uncertain. Mainstream demand has also been hurt by crypto blowups such as the bankruptcy of the FTX exchange.
“Markets have priced in a Bitcoin spot ETF approval and I expect a sell-the-news event if it’s approved,” said Hayden Hughes, co-founder of social-trading platform Alpha Impact.
Technical chart patterns below hint that the Bitcoin rally has become stretched, while options bets indicate some speculators see a possible runway to $40,000 before the token stalls. Bitcoin was steady at $34,475 as of 7:12 a.m. in London on Thursday after more than doubling this year following a deep rout in 2022.
Fibonacci ratios — proportions found in nature that are also used to help identify market reversals — indicate a zone just below $36,000 poses a challenge for the Bitcoin bounce. The zone is delineated by the 38.2% Fibonacci retracement of Bitcoin’s one-year plunge through November 2022.
Cici Lu McCalman, founder of blockchain adviser Venn Link Partners, said she expects short-term selling if US spot Bitcoin ETFs are approved but added that the products would be “bullish” for the token longer term.
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