In a surprising turn of events, Bitcoin experienced significant price volatility following a false announcement of the approval of the first U.S. spot Bitcoin exchange-traded fund (ETF). However, trading firm QCP Capital has cautioned against expecting an explosive bull market response even when an official ETF approval does occur.
False ETF approval sparks short-lived price surge
Bitcoin, the world’s most popular cryptocurrency, recently faced a whirlwind of price movements as a hacker posted a fraudulent announcement on the Securities and Exchange Commission (SEC) Twitter account, claiming the approval of a U.S. Bitcoin ETF. While the market initially responded to this fake news enthusiastically, the rally was short-lived as the truth behind the announcement emerged.
The incident was later revealed to result from a SIM swap attack in which the attacker accessed the SEC’s Twitter account. What made the situation more alarming was that the account did not enable two-factor authentication at the time of the breach.
During this chaos and the subsequent retraction of the false approval by the SEC, the price of Bitcoin managed to inch closer to the $48,000 mark. However, this episode has raised questions about how Bitcoin might react when a genuine ETF approval is eventually granted.
Market analysts express caution
QCP Capital, a trading firm, has noted caution in this regard. In a market update, they noted that the market’s initial response to the fake ETF approval was relatively muted, with Bitcoin failing to break through key resistance levels.
This leads them to believe that a genuine ETF approval may already be priced into the market, potentially dampening any major post-approval rally.
“The initial reaction to the ‘approval’ was muted with BTC being unable to trade out of the resistance area,”
QCP Capital told its Telegram subscribers.
“We take this as a warning sign that an approval is mostly priced in, and there may not be a huge rally post the approval.”
Despite these reservations, it is worth noting that there is still the possibility of a legitimate ETF approval. ARK Invest’s application is set to be decided upon by the SEC, with a deadline of January 10. Historically, the SEC has approved all ETFs at once, so the chances of an announcement were considered high.
Bitcoin’s uncertain future price trajectory
For Bitcoin traders, the price level of $48,000 has become a focal point, often considered a local top. However, what comes next remains a topic of debate among experts. Some anticipate a period of sideways price movement, while others hold a more bearish outlook, suggesting a significant correction towards $35,000 or even lower.
One of the most notable pessimistic predictions comes from a trader, Il Capo of Crypto, who envisions a retreat in Bitcoin’s price down to $12,000 at some point in the future.
As of the writing, BTC/USD was trading near $45,600, indicating the market’s uncertainty and cautious sentiment surrounding the potential ETF approval and Bitcoin’s future price trajectory. The cryptocurrency market remains highly dynamic and unpredictable, influenced by many factors beyond ETF approvals.
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