‘Bitcoin price will reach One million dollars after approval of spot ETF’. This is the voice of many crypto social gurus. How much realistic is this forecast? This article attempts to make a realistic forecast of Bitcoin price by explaining the actual game in BTC after ETF approval. It provides valuable suggestions on how a retail crypto individual can get benefit from this BTC-ETF mania.
Contents
Initial Response of Bitcoin ETF Approval:
As expected, ETF approval will instill much anticipated positive sentiment into the crypto market. Bitcoin and most of the altcoins will observe an instant price pump. Will this pump push the BTC price toward a million dollars?
Not at all! It can add only 10% to 20% appreciation to Bitcoin price because of the smart money game.
The Game of Smart Money:
On approval of Bitcoin ETF, two types of BTC traders will come into the ring; ETF Buyers and ETF sellers. Buyers will be mostly retail individual investors whereas sellers will comprise institutional investors. A large number of individuals will be buying Bitcoin as well as ETF under the excitement of a bull run. This becomes an opportunity for smart money which is always in search of heavy trade volume. The institutional investors will go on selling Bitcoin as well as Bitcoin ETF.
Why Bitcoin Price will not shoot the moon?
However, institutional investors will not allow the Bitcoin price to shoot the moon as 1% appreciation in price will cause 1% loss to them. After a certain price appreciation, corporate institutions, being the bank of liquidity, will increase the selling rate to the amount that will be difficult for the crypto market to absorb. Resultantly, the BTC price will revert to the mean.
Long-term Impact:
Bitcoin
On a long-term basis, Bitcoin price will get stabilized within a narrow range as the selling pressure from corporate institutional investors will moderate every time a pump happens.
Altcoins
Anyhow, altcoins will be the real beneficiaries of this crypto ETF approval. Positive crypto sentiment will take some altcoins to the moon i.e. price may appreciate in multiples. This is due to the absence a selling pressure. No selling from institutional smart money and huge buying by individual crypto investors under positive crypto sentiment will put some of the crypto altcoins on a parabolic trajectory.
How an Individual Should Play Crypto ETFs Approval?
Cash the Pump
The best way is to go with the trend. Cash the initial pump due to positive sentiment and get out when you see the signs of fading momentum.
Keep an Eye on Trend Momentum
Keep a close eye on signs of a bearish trend reversal. Candlestick patterns provide the first signal of incumbent trend reversal. Meticulously watch intraday technical chart patterns and trading volume. Drying trading volume in a bullish trend is a sign of weakness in the trend. Moreover, the formation of bearish chart patterns is an authentic sign that signals a downtrend may kick in anytime.
Avoid Euphoria
Last but not least, guard yourself against the excitement of a bull run as euphoria is the worst enemy in equity trading because it bypasses your rationality.
End Note:
Realistic analysis of institutional investors’ game reveals that Bitcoin is not going to the $1 million after the approval of Blackrock BTC ETF. Positive sentiment after ETF approval will pump up the price but not more than 20%. So position yourself to watch and get benefit from this trading game of smart money vs individual crypto investors.