‘Buy the rumor, sell the news’ — Bitcoin ETF may spark TradFi sell-off
Bitcoin (BTC) may suffer when the first spot exchange-traded fund (ETF) is approved by the United States, a new warning says.
In a thread on X (formerly Twitter) on Nov. 28, Joshua Lim, head of derivatives at capital market firm Genesis Trading, predicted a volatile start to 2024 for BTC price action.
Bitcoin is already a target for traditional finance, or “TradFi,” which is betting on winning big out of the spot ETF approval, Lim said.
“We know tradfi guys / macro tourists are already long crypto ahead of ETF news, they’ve built the position over the last few months and are now paying handsomely to roll it,” the thread explained alongside data covering open interest on CME Group’s Bitcoin futures.
The signs are there in the performance of the first Bitcoin futures ETF (BITO), as well as stocks of crypto firms such as U.S. exchange Coinbase (COIN), the latter up 250% year-to-date.
While generating buzz and emboldening the institutional adoption narrative behind Bitcoin, the party could nonetheless quickly fizzle once the spot ETF is actually given the green light. This, Lim and others suggest, would be a classic “buy the rumor, sell the news” event.
“What does it all mean?” he queried.
Lim is not alone in wondering if ETF approval day will ultimately leave lay investors disadvantaged.
Related: Bitcoin metric that ‘looks into future’ eyes $48K BTC price around ETF
Responding, James Straten, research and data analyst at crypto insights firm CryptoSlate, channeled history to support the concerns.
“When the Gold ETF (GLD) was introduced in November 2004, it opened around $45 and dropped to approximately $41 by May 2005. However, it saw an impressive 268% increase over the subsequent seven years,” he added in a CryptoSlate analysis
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