QCP Capital believes that the Bitcoin ETF approval could be a sell-the-news event thereby pushing the Bitcoin price under $40,000, before resuming the next uptrend.
The Bitcoin (BTC) price has registered a strong rally gaining 15% so far in December and moving closer to $44,000, where it encounters strong resistance. At press time, Bitcoin is trading at $43,649 with a market cap of $854 billion. As the Bitcoin spot ETF launch approaches within the next three weeks, QCP Capital provides insights into the potential announcement timeline and market dynamics. The ETF providers have resolved the last sticking point concerning ‘cash only’ versus ‘in-kind’, aligning with the SEC’s ‘cash only’ demand.
While the launch nears, QCP Capital emphasizes the likelihood that the actual demand for the BTC spot ETF may initially fall short of market expectations. This anticipation sets the stage for a classic ‘sell the news’ scenario in the second week of January.
QCP Capital anticipates topside resistance for BTC in the 45-48.5k region, with a possible retracement to 36k levels before the uptrend resumes. Despite the expected short-term adjustment, the firm expresses confidence in the eventual continuation of the upward trend, possibly after a few weeks, as the market positions for a robust rally leading into the BTC halving.
For those already long on BTC, QCP Capital suggests a tactical play, recommending selling covered calls to leverage elevated forwards and vols. Additionally, they propose considering the purchase of out-of-the-money puts as a strategic move to navigate the post-ETF dip.
A Bullish Take on Bitcoin
Reports from Matrixport and CryptoQuant have a bullish take on the Bitcoin ETF as we approach the Bitcoin ETF approval in the next two weeks. Matrixport anticipates SEC approval for Bitcoin Spot ETFs in January, foreseeing a potential surge that could drive Bitcoin prices beyond $50,000 by the end of January 2024.
Drawing parallels to historical events, such as the launch of CME Group’s Bitcoin Futures in 2017, Matrixport highlights a significant price escalation leading up to such milestones. During the six to seven weeks between the confirmation of the Bitcoin futures launch and their actual trading, prices experienced a notable +196% increase.
TV commercials from various ETF applicants are increasing, contributing to Bitcoin price support. The race for ETF dominance is set to intensify over Christmas, possibly pushing Bitcoin to $50,000 if Bitcoin Spot ETFs gain approval.
According to a report shared with CoinDesk on Wednesday, CryptoQuant, an on-chain analysis firm, predicts a potential surge in bitcoin prices to at least $50,000 in the short term. The anticipated demand for bitcoin is due to the launch of several spot exchange-traded funds (ETF) in the US, the upcoming halving, and the overall growth in broader stock markets, driven by rate cuts.
“On-chain valuation and network metrics signal bitcoin remains well inside a bull market and may be targeting $54,000 in the medium term and $160,000 as this cycle price top in 2024,” noted CryptoQuant.