Bitcoin’s subdued price doesn’t necessarily mean failure in the ETF launch. Here’s why

“This pattern is a common occurrence and does not signify a failure in the ETF launch.”

Bitcoin (BTC) wrapped the week at $41,750, marking a 5.0% decline from the previous week, accompanied by a whirlwind of volatility driven by the approval of BTC Spot ETFs. In the aftermath of the SEC’s green light for the ETFs, Matteo Greco, Research Analyst at Fineqia International, provided insights into the classic “buy the rumor, sell the news” market behavior.

The week commenced with optimism, witnessing a robust 9.0% surge on Monday, nearly touching $47,000, fueled by anticipation of the approval. However, Tuesday’s false news on the approval triggered volatility, briefly dipping below $45,000 before stabilizing at $46,000.

Wednesday brought the anticipated SEC approval for BTC Spot ETFs, intensifying volatility, especially during ETF trading on Thursday. BTC reached almost $49,000 before a substantial downtrend, notably on Friday, with a 7.7% decline, breaking below $43,000. The weekend witnessed a gradual decrease, closing the week at $41,750.

The launch of BTC Spot ETFs triggered heightened market activity, evident in the nearly $50 billion daily volume on centralized exchanges from January 8th to 14th, the highest since November 2022. BTC recorded a daily volume of $17.8 billion, marking a 26% increase from the preceding week. Ethereum (ETH) saw a total daily volume of $7.7 billion, an 83% surge.

Analyzing BTC dominance, it stood at 51.1%, indicating a 5.4% decrease from the previous week, showcasing increased market strength beyond BTC, Greco noted.

“This pattern is a common occurrence and does not signify a failure in the ETF launch”

Matteo Greco’s perspective sheds light on the observed market behavior, aligning with the “buy the rumor, sell the news” pattern. Investors, anticipating a 90% probability of ETF approval, strategically adjusted portfolios before SEC confirmation. Post-approval, profits were taken on lower-priced BTC positions, with capital reallocating to altcoins.

In Q4 2023, BTC exhibited a robust 57% increase, reaching $42,300 from $27,000 at Q3 end. The almost $49,000 peak post-approval led to profit-taking, and investors shifted capital to altcoins.

Matteo Greco rejected that the pattern doesn’t signal ETF failure. In the initial two days of trading, 11 BTC Spot ETFs saw a cumulative $1.4 billion inflow, partly offset by a $600 million outflow from Grayscale Bitcoin ETF (GBTC). Greco attributes the GBTC outflow to its higher management fee, noting it doesn’t imply ETF failure but a strategic shift in investor preferences.

“The price action of BTC, coupled with volume data and the performance of certain altcoins, demonstrates the adherence to the typical “buy the rumor, sell the news” pattern associated with major market events. Market participants, anticipating the ETF approval with a 90% probability, adjusted their portfolios accordingly before the SEC approval,”  he stated. “This pattern is a common occurrence and does not signify a failure in the ETF launch.”