For today’s market update, we start by summarizing what happened and our thoughts from last night.
Then, we’ll go onto how we expect things to play out today and in the next few weeks.
Last night's fake news fiasco
Essentially, a tweet from the SEC's Twitter account said the BTC ETF had been approved. It hadn't! It turns out that the SEC’s Twitter account was hacked, and the hacker posted the tweet. SEC Chair, Gary Gensler, quickly debunked the news - the fake news and its rebuttal led to a whip-sawing in price action.While there are many valid reactions to the debacle, the key thing we took away was the market's reaction to the news that the ETF had been approved. We saw an immediate pump from $46,600 to $47,800 within 4 minutes, but price then dumped to $46,000 3 minutes later, and then to $45,000 9 minutes after that.
This suggested that all those who had positioned for the ETF had sold into this initial pump, assuming they hadn't closed their positions out in the last few weeks. This is essentially what led us to be really cautious late last night, as we felt the market kind of "showed its hand".
By this, we mean we got the news and saw how participants reacted. Traders aren't looking to buy the news of approval; they're hoping "plebs" buy it, and they can sell their positions into it. What this suggests is that beneath the hood of the market, there is weakness there.
This led one of our analysts to sell half their $SOL bag at $99. SOL is one of those coins that have had a really good run, so they were happy to book some profits and try to accumulate lower.
Below is the 1-minute chart of BTC's price action last night so you can see the whip-sawing.
Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.
What we are expecting today
We expect the SEC to approve the ETFs after trading in the US closes this evening.We may see another really small pump on this news, but we are not even sure we see north of $46k now. The market has read through what happened last night.
Ask yourself: who is sitting on the sides waiting to buy BTC and who isn't expecting an SEC approval? Honestly, it's probably 98% priced in.
Additionally, Blackrock and other applicants have likely been buying BTC over the last six months to seed their ETFs.
What would they have paid for that BTC? $32k/$34k/$36k/$40k?
Either way, they can now effectively sell the BTC they've bought to their clients for $44k.
The ETF won't be priced like this; it will probably be priced at $44/$45, just so the shares seem easy to buy. So, even though Blackrock say they've got $2b of inflows expected. They've probably already spent $2b on BTC over the last six months to seed the ETF, and now they're selling those shares in the ETF at the equivalent of a $44k/$45k BTC. They've made massive profits.
Now, they've just got to ensure they can sell all the BTC they've bought to their clients.
Cryptonary's take
We feel that there will be big market-making and, therefore, lots of volatility over the coming weeks.We anticipate this volatility because ETF issuers will be locked in a battle to become the most liquid and volume-heavy ETF - as this is what's needed to win and become the dominant ETF.
However, beyond this, we think there will be a wider pullback in the market, down to at least $38k for BTC in the coming month or two.
Now, we don't look at this as a perma-bear situation. We remain massively bullish on the space.
Even though we feel that Q1 and Q2 will be more consolidatory/have greater pullbacks, we see these as huge opportunities to increase spot exposure and bring down your average entries - assuming you bought higher than lower.
If you lack exposure to small and mid-cap altcoins, we believe in the coming months; this will be your opportunity to get good entries in the ones that have recently shown strength.
For us, the first half of this year is about not degening too much and building sizable spot bags in altcoins that can perform well in peak bull.
We see the next few months as a massive opportunity to load up the RIGHT bags to go on and then to make massive gains in the second half of 2024 and the first half of 2025.
Remember, the hard work in a bull market is done at the back end of the bear and the early periods of the bull.
Do your work now! And when euphoria hits in 9-15 months, you can then put your feet up.
LFG!!!