Bitcoin Hits $40K: ETF Contrarian Bets Prove Accurate

• Bitcoin ETF Approval Turns into a Sell-the-News Event
• Bitcoin Experiences Price Pullback
• Market Analyst Predicts Correction
• Long-Term Expectations Remain Bullish

Bitcoin ETF Approval Turns into a Sell-the-News Event

The recent approval of a spot exchange-traded fund (ETF) for Bitcoin$42,260 -0.64% (BTC) transformed into a sell-the-news incident, validating the forecasts of contrarian bets. This outcome had been suggested as a possibility by analysts, given the substantial price surge of the cryptocurrency in recent months. The term sell the news, often used in capital markets, encapsulates the patterns of asset prices, leverage, and sentiment rising before a positive event, only to plummet shortly afterwards.

Bitcoin Experiences Price Pullback

Bitcoin experienced a price pullback to roughly $41,500 early Monday, prior to recovering, after reaching a two-year high above $49,000. This occurred as the first-ever spot bitcoin ETFs in the U.S. commenced trading. This was a much-anticipated event and had a significant impact on pricing. Analysts from the Japan-based crypto exchange bitBank predict this occasion might signal a short- to mid-term peak for the price.

The experts at bitBank suggested that the $40,000 mark could serve as a support level for Bitcoin prices in the near future. Meanwhile, 10x Research analysts, led by Markus Thielen, propose prices could find support at as low as $38,000.

Market Analyst Predicts Correction

FxPro market analyst, Alex Kuptsikevich, proposed that a correction to at least $40,000 per Bitcoin is plausible. This is within the normal range of corrections, considering the cryptocurrency's significant price increase of over 150% over 2023.

Long-Term Expectations Remain Bullish

Long-term expectations for Bitcoin seem to remain predominantly bullish, considering the evident demand for ETFs from institutional players. Henry Robinson, founder at crypto fund Decimal$0.013 0.21% Digital Group, believes Bitcoin ETFs will revolutionize the industry by providing greater access for traditional wealth management. This will attract new investments from endowments, insurance companies, retirement plans, and others.

However, Robinson also pointed out that while the launches of ETFs are thrilling, they offer no advantages over self-custody. Long-term holders may experience substantial fee emissions that could negatively affect their position. As Bitcoin adoption increases and self-custody becomes more prevalent among institutions, the demand for ETFs is expected to decline in the long run.

Edited by Jonathan Stoker