After many twists and turns, the U.S. Securities and Exchange Commission (SEC) has finally approved multiple Bitcoin spot ETF applications, ushering in a new era for BTC. However, many people believe that there will be a price correction period after the ETF is approved. This article is sourced from “Riyue Xiaochu” and is compiled and written by BlockBeats.
Tweet
“Having gone through various obstacles, the U.S. SEC has finally approved 11 Bitcoin spot ETFs, marking a new era for BTC. However, many believe that there will be a price correction period after the ETF is approved. This article is sourced from Riyue Xiaochu and is compiled and written by BlockBeats.”
Table of Contents:
Issue 1: Reasons for forming a top
Issue 2: Concerns about BTC spot ETF
Issue 3: Mid-term trend interpretation and trading strategy
Trading Strategy:
Yesterday, at 5 am, the SEC announced the approval of 11 Bitcoin spot ETFs. At 7 am, Bitcoin briefly surpassed $47,000; at the time of writing, the price had fallen to $46,102.
After the highly anticipated Bitcoin spot ETF was approved, the market has had different views on the current market trend. Some believe that Bitcoin is about to enter a bull market, while others suggest that there may be a new round of adjustment or a downward trend after recent positive news. Cryptocurrency analyst Riyue Xiaochu shared his views on X, and the key points are summarized as follows:
Issue 1: Reasons for forming a top
1) There is a large amount of profit-making funds.
This is a prerequisite, which means that there is significant selling pressure in the market. After nearly 3 and a half months of market performance, most cryptocurrencies have experienced significant price increases. Some have increased by tens of times, while others with medium market capitalization have increased by 10 times, and those with large market capitalization have generally increased by 2 to 3 times.
2) Outflow of funds, with main funds starting to withdraw.
In December, we experienced the hype of certain cryptocurrencies, the surge of Solana, the momentum of DeFi, Layer2, and the Polkadot ecosystem. It is evident that the upward momentum will continue to decrease. When subsequent sectors start to rise, the previously rising sectors will start to decline. This is because the funds for buying into the market have been exhausted, and most of the market is either fully invested or leveraged, so they need to sell one cryptocurrency to buy another.
These two phenomena clearly indicate that the purchasing power of funds is continuously diminishing. From a fund’s perspective, a market will go through three stages:
– Continuous outflow of funds.
– Exhaustion of outflow funds and internal fund competition.
– Realization of profits and withdrawal of main funds. This means that the money left on the table is becoming less and less.
3) Retail investors generally hold bullish views.
Currently, there are no influential figures on Twitter who hold bearish views. The most common argument is that there will be a correction to $42,000 and then continue to rise. In various groups, the sentiment is mostly bullish, and positions are relatively heavy. It is a cruel fact that retail investors are the last ones to enter the market. This means that when retail investors are heavily invested, there is no more incoming capital.
In short, there is a strong deviation between bullish sentiment and actual fund situation.
Issue 2: Concerns about BTC spot ETF
1) BTC spot ETF is a long-term positive development as it can bring more funds to purchase BTC. In the short term, it is positive news. It will stimulate the price of BTC in the short term. However, we must be aware that the approval of the ETF does not immediately bring in a large amount of off-exchange funds.
The spot ETF is just a channel for purchasing, although it connects with a large number of influential funds. These funds have extensive experience in the market and their decision to buy or not depends on whether there are suitable positions and prices.
Therefore, after being able to legally purchase, they still need to consider whether BTC is worth entering. So, I think the ETF is somewhat similar to Grayscale’s GBTC in 2020. They are boosters of a bull market, but they are not the reason for starting a bull market.
2) This round of market trends is initiated by the ETF. If you recall three months ago, it is unlikely that anyone in the market would have expected BTC to rise to the $48,000 level. This height is not much different from the peak of the bull market in 2021.
Since the expected 25-year bull market is still far away, and from the perspective of the external financial market, the U.S. Federal Reserve is in a tightening cycle. It is clear that some insiders and accurate analysts anticipated the approval of the ETF and drove this market trend. Therefore, when the ETF is approved as scheduled, it is the time for them to cash out.
Issue 3: Mid-term trend interpretation and trading strategy
In this mid-term downward trend, where should we adjust to?
This is difficult to say. BTC may experience a correction of around 20% to 30%, attracting a lot of funds to enter. However, altcoins may not perform as well, and a significant correction is expected, especially for those with high price increases.
If the external market is unfavorable, such as a major stock market crash, the pullback of BTC will be much higher. It is not impossible to see a scenario similar to March 12th.
Trading Strategy:
1. Regarding positions, it varies depending on individual risk preferences. Keeping 20% to 60% is recommended, mainly for long-term holdings. Those with high risk tolerance can keep more.
2. For coins with heavy positions, it is advisable to sell some in the recent days to reduce positions. Be cautious not to choose to sell at a profit, as it is incorrect to hold onto losing positions. Consider the following:
– For those who want to hold long-term, it is advisable to retain some.
– For coins that have experienced significant declines since the start, and have rebounded due to positive news, it is recommended to sell. This is because main funds have already exited, and there are more trapped investors. It is often difficult for such coins to reach new highs again.
– Consider recent hot topics.
[Image]
Related Reports
Elon Musk: Considering sending Bitcoin to Mars! Twitter may also embrace BTC payments.
Bitcoin spot ETF fee war begins! Cheap low-rate fees hide “traps”?
Top 15 countries most interested in “Bitcoin ETF” revealed: U.S. not in the top ten, Taiwan listed?