- Bitcoin currently faces technical challenges, showing signs of an “overbought” condition, just as the market anticipates the launch of the first US Bitcoin ETF.
- The impending ETF decision poses a potential “sell the news” event, which could significantly impact Bitcoin’s price trajectory in the short term.
Bitcoin’s Rally and the Anticipated ETF Launch
Bitcoin has recently marked its 2023 high at $35,000, currently consolidating around $34,500. The prevailing optimism stems from the anticipated approval of the first U.S. Bitcoin exchange-traded funds (ETFs), which directly invest in the cryptocurrency. This optimism, however, brings forth a crucial question: Will the actual approval of these ETFs prompt investors to take profits, potentially leading to a market correction?
The market is now at a crucial juncture, awaiting to see if Bitcoin can sustain its rally upon the introduction of the spot Bitcoin ETF in the U.S. market. Hayden Hughes, co-founder of Alpha Impact, expressed to Bloomberg that the market has likely already priced in the approval of a Bitcoin spot ETF, suggesting a potential “sell-the-news” event upon its official approval.
Technical Indicators and Market Dynamics
Bitcoin’s recent surge to over $35,000, a level not seen since 2022, stands in stark contrast to the global stock markets, which are currently grappling with increasing long-term Treasury yields and deepening geopolitical uncertainties. This divergence from other risk-on assets, such as U.S. equities, positions Bitcoin in an interesting light, and the market is closely watching to see how long this outperformance can last.
From a technical standpoint, Fibonacci ratios indicate a potential challenge for Bitcoin’s upward trajectory just below the $36,000 mark, aligning with the 38.2% Fibonacci retracement of Bitcoin’s decline throughout the past year. Furthermore, Bitcoin’s weekly relative-strength index (RSI) has recently surpassed 70 for the first time since 2021, entering what is traditionally considered an “overbought” territory. This condition may reduce the likelihood of experiencing rapid, large-scale rallies similar to recent intraday surges.
On the derivatives side, data from Deribit, a leading cryptocurrency options exchange, reveals a substantial accumulation of bullish bets on Bitcoin reaching $40,000 by the year’s end, a scenario that would signify a 16% increase from current levels.
Bitcoin vs. Gold: Shifting Dynamics
Interestingly, Bitcoin’s rally seems to be capturing attention away from traditional safe-haven assets like gold. Bloomberg’s Senior Macro Strategist, Mike McGlone, observes an evolving dynamic between Bitcoin and gold, suggesting a potential shift in the market’s perception of these two assets. The impending approval of U.S. spot Bitcoin ETFs is poised to play a crucial role in this transformation, potentially further integrating Bitcoin into mainstream finance and challenging gold’s longstanding position.