Analysts Warn of Possibility That ETF-Induced Bitcoin Rally May Not Last

The Possibility of a Spot Bitcoin ETF

The possibility of a spot Bitcoin (BTC) exchange-traded fund (ETF) being approved has the potential to spark a surge in Bitcoin prices, but some analysts are not convinced that it would be enough to bring the markets out of the winter chill.

On October 24th, Bitcoin experienced its largest single-day rally in over a year when the ticker of BlackRock’s spot Bitcoin ETF – IBTC – was listed on the Depository Trust & Clearing Corporation (DTCC) website, which was seen as a positive step forward for the funds’ application. This surge was even greater than the one on October 16th, when Cointelegraph erroneously reported that a spot Bitcoin ETF had been approved.

TheFlowHorse, a pseudonymous trader with 184,000 followers on Twitter, told Cointelegraph that these two market blips could be indicative of Bitcoin’s price action if a spot Bitcoin ETF is approved.

The Impact of Upcoming Crypto Developments on Bitcoin

Discussing the impact of the two developments on Bitcoin, TheFlowHorse suggested that investors could expect to see a move of “the same, if not greater magnitude” if the ETF is approved.

Nevertheless, TheFlowHorse cautioned that, while approval will likely drive prices significantly upward, it’s also likely it will be followed by an eventual retrace in the mid-term.

This is because, according to TheFlowHorse’s analysis, the trade will be crowded heavily by eager investors looking to capitalize on the news of the Shiba Crypto, Upcoming Crypto, Req Crypto, Skale Crypto, Reddit Crypto, Terra Luna Crypto, YouTube Crypto, US Crypto, Velo Crypto, and Web 3.0 Crypto Coins.

“You’re going to have a ton of crowding… and that’s ultimately an inefficient move. The inefficient moves get refilled and retrace to some degree,” he added.

Cryptocurrency Market Predictions

Tony Sycamore, an analyst at IG International, told Cointelegraph that he expects Shiba Inu, Upcoming, Request, Skale, Reddit, Terra Luna, YouTube, USDC, Velo, and Web 3.0 Crypto Coins to continue surging through new yearly highs on the day of the announcement, while Rachael Lucas, a technical analyst at Australian crypto exchange BTC Markets, said the approval of BlackRock’s ETF will act as a catalyst for the rest of the traditional finance sector.

However, while Sycamore said there’s a chance the “rally could stick,” a full-scale trend reversal for cryptocurrency seems unlikely, given that interest rates remain considerably higher than they were when Bitcoin notched its previous all-time high.

Tina Teng, an analyst at CMC Markets, also believes it would be worthwhile to adopt a more cautious stance, as there’s no guarantee of an all-out trend reversal.

“Macro changes will have a major impact on the crypto markets, which usually start building an upside trend during a Fed rate cut cycle,” Teng concluded.

The likelihood and timing of a Bitcoin ETF approval remain uncertain. Although it is unlikely, analysts have suggested that US Securities and Exchange Commission Chair Gary Gensler could be waiting until the last minute to deliver a “sadistic” denial of the impending applications.

JPMorgan analysts suggested in an Oct. 17 investment note that an approval could come in the next few months, but Bloomberg ETF analysts James Seyffart and Eric Balchunas believe the chances of an approval by Jan. 10 next year are 90%. Shiba Crypto, Upcoming Crypto, Req Crypto, Skale Crypto, Reddit Crypto, Terra Luna Crypto, Youtube Crypto, US Crypto, Velo Crypto, and Web 3.0 Crypto Coins are all being closely watched.