Bitcoin drops 10% since Thursday’s top in classic ‘sell the news’ move, where is bottom?

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Last Updated on 13 January 2024 by CryptoTips.eu

Bitcoin did very well the first day after an ETF was approved for trading on the US stock exchanges. It was calculated that on day one some $5 billion was traded in ETFs of the various Wall Street companies.

Yesterday the predicted ‘sell the news’ move downwards started with a pullback of some 6% in the past day alone. Since the peak of $49,000, Bitcoin has dropped about 10% in 30 hours.

Advertentie.

Short and long term

On January 9, I wrote that there were two possibilities if a Bitcoin ETF were to gain approval. Either a pullback through some kind of ‘sell the news’ event (something Cathie Wood also warned about at the beginning of the year), or a quick shoot to $50,000.

‘Buy the rumor, sell the news’ is an old saying from the world of finance. It means that you should buy a stock or asset the moment you hear a rumor and sell it again when the rumor becomes fact.

On Thursday, Bitcoin shot up to $49,000, so that second prediction (almost) came true. And now, many investors who bought during the summer of 2023, when Blackrock announced it was working on a Bitcoin ETF, are taking their profits and selling. Earlier this week I estimated support at $38,000. Pessimists like the Cryptoquant research team think a pullback to $32,000 is a possibility.

The percentage of long-term buyers for Bitcoin (individuals who do not touch their investment for an extended period of time) is around 70%, aka a very large number, at this time. So don’t count on those people selling at $40,000 or so. Most of them really think that a $100,000 price point is possible at some point and plan to HODL until that happens.

So unless there is a stock market crash, a significant floor is being placed under Bitcoin for the next few months. You can also clearly see that the price is dropping less quickly than before. The largest digital currency trades almost like a stock, in a controlled movement.

Geopolitics

However, there are also geopolitical circumstances that could further depress the price.

A revival of the war in Ukraine, an expansion of the war between Hamas and Israel into a regional conflict, further attacks on Yemen by the United States and the United Kingdom, poor inflation figures, a conviction for former President Donald Trump, all these possibilities are in play. From now on, the price of Bitcoin will also correlate to world events because Wall Street now owns a part.

But a flash crash is (in my opinion) less likely from now on. Or maybe a little one, you never know. Happy trading.

alfexe / Depositphotos.com

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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