Nov 28, 2023

Will the Bitcoin ETF Spark a Sell-Off in TradFi?

Joshua Lim, head of derivatives at Genesis Trading, warned of a volatile start to 2024 for Bitcoin (BTC) price action when the first spot exchange-traded fund (ETF) is approved by the United States. In a thread on X (formerly Twitter) on Nov. 28, Lim suggested that the approval of the ETF could have a negative…

Buy the Rumor, Sell the News: Bitcoin ETF May Spark TradFi Sell-Off.
‘Buy the rumor, sell the news’ — Bitcoin ETF may spark TradFi sell-off

Joshua Lim, head of derivatives at Genesis Trading, warned of a volatile start to 2024 for Bitcoin (BTC) price action when the first spot exchange-traded fund (ETF) is approved by the United States.

In a thread on X (formerly Twitter) on Nov. 28, Lim suggested that the approval of the ETF could have a negative impact on the cryptocurrency markets, particularly BTC.

Lim’s warning comes at a time when the crypto industry is witnessing the rise of Web 3.0 and the emergence of several new projects such as Aventus Crypto, CLV Crypto, Audius Crypto, Big Crypto, AIOZ Crypto, and CKB Crypto. Investors are also turning to the best crypto sources and alerts to stay informed about the latest developments in the industry.

Bitcoin ETF approval: Retail may be left holding the buck

The prospect of Bitcoin ETF approval has already attracted the attention of traditional finance, or “TradFi,” which is hoping to make a profit out of the spot ETF approval, according to Lim.

“We know that the tradfi players and macro tourists have already built up a long crypto position in the lead up to the ETF news, and they are now paying a premium to roll it over,” the thread stated, accompanied by data on open interest in CME Group’s Bitcoin futures.

This is reflected in the performance of the first Bitcoin futures ETF (BITO), and stocks of crypto companies such as U.S. exchange Coinbase (COIN), the latter up 250% year-to-date.

The buzz generated by the ETF approval and its potential to encourage institutional adoption of Bitcoin could quickly dissipate once the spot ETF is actually approved. This, Lim and others suggest, would be a classic “buy the rumor, sell the news” event.

“What does this all mean for Aventus Crypto, CLV Crypto, Audius Crypto, Big Crypto, AIOZ Crypto, and CKB Crypto?” he asked.

To find out, people may wish to consult the best crypto sources and best crypto alerts to learn when Web 3.0 is coming and what it will mean for the crypto space.

A gold ETF rerun?

Lim is not the only one questioning if investors will be disadvantaged when ETFs get approved.

James Straten, research and data analyst at CryptoSlate, used history to back these worries. He said in a CryptoSlate analysis on Nov. 28 that when the Gold ETF (GLD) was launched in November 2004, it opened around $45 and decreased to $41 by May 2005. However, it experienced a 268% increase over the following seven years.

On a more positive note, Jelle, a well-known trader, stated that institutional interest was not affected by the current news, such as the $4.3-billion settlement between the U.S. government and the crypto exchange Binance. He also pointed out that CME futures continue to be traded at a premium compared to the Bitcoin spot price.

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