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Forecasting BTC Price Action Post–ETF Decision

  • I generally do not like to forecast price action. Given the extreme attention to the upcoming SEC decision on BTC ETFs, I thought I’d weigh in with my thoughts.
  • As of January 7, the odds of an SEC approval sit at 83% according to prediction markets. The odds of BTC reaching 50,000 by Jan 31 sit at 51%. This suggests that even if a BTC ETF is approved before Jan 11, the resulting rally may face selling pressure prior to this level. I see 48,000 as the highest high, which aligns well with the failure into resistance in March of 2022.
  • BTC sits around 64% of its ATH. In past cycles, the price of BTC in the January preceding a halving event is around 35% of ATH. This suggests bullish price action has been pulled forward in anticipation of the ETF approval. It’s impossible to predict how much appreciation is left to be had. Events such as this have typically been followed by bearish price action (see Coinbase and BTC futures listings).
  • If the ETF is rejected or delayed, a substantial selloff should occur. I estimate the zone of support to be between 36,000 and 38,000 in this scenario.
  • As I mentioned earlier, if the ETF is approved, a rally of some sort is likely. I think any rally would be short lived, however, with opportunistic selling capitalizing on bullish sentiment. The recent rise in the DXY and Treasury yields is another headwind to consider.
  • Ultimately, my belief is that a BTC ETF approval provides a risky, short-term bullish set up that is unlikely to have staying power. In short, buy the rumor sell the fact (and the rumor seems to have been exhausted).

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