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Bitcoin Traders Monitor $40K Support: Contrarian Bets on ETFs Validate Market Sentiment

Jan 16, 2024 at 08:08 am

The recent approval of spot bitcoin exchange-traded funds (ETFs) in the United States met the high expectations of the market, with analysts incorporating this anticipated event into their forecasts. However, the aftermath has brought about a shift in sentiment, leading experts to predict a probable short- to mid-term peak for the cryptocurrency's price.

Contrarian investors, who took positions against the prevailing market sentiment, found validation in their bets on Bitcoin (BTC). The approval of the much-anticipated spot ETF triggered a classic "sell-the-news" response, a well-known phenomenon where asset prices and sentiment build up ahead of a positive event, only to decline shortly afterward.

BTC encountered a pullback, dipping to a low of $41,500 early on Monday. This retracement followed a brief surge to a two-year high above $49,000, coinciding with the commencement of trading for the inaugural spot bitcoin ETFs in the U.S. last Thursday.

Analysts from bitBank, a Japan-based crypto exchange, acknowledged the approval's well-anticipated nature and appropriate valuation. They now posit that this event could signify a short- to mid-term peak for Bitcoin's price. While noting the potential vulnerability to profit-taking in the short term, they emphasized limited downside risk, citing lower U.S. treasury yields and an optimistic outlook for the Federal Reserve's early rate cuts.

bitBank identified the psychological support level of $40,000 for bitcoin prices in the near term. In contrast, analysts at 10x Research, led by Markus Thielen, anticipated support at even lower levels, possibly around $38,000, as outlined in a Monday note.

FxPro market analyst Alex Kuptsikevich, in a Monday communication with Bitsday, suggested that a correction to at least $40,000 per bitcoin would be considered "within bounds of typical corrections." This assessment aligns with the cryptocurrency's impressive price performance, boasting over a 150% increase throughout 2023.

Despite the short-term fluctuations, long-term expectations for bitcoin remain predominantly optimistic. Notably, there is a clear demand for ETFs, evidenced by robust trading volumes, especially among institutional players. Henry Robinson, the founder of crypto fund Decimal Digital Group, highlighted the transformative potential of Bitcoin ETFs for the industry. He anticipates increased investment from traditional sources such as pensions, endowments, insurance companies, sovereign wealth funds, retirement plans, trusts, and more, signaling a potential paradigm shift in cryptocurrency investment dynamics.

Read More: Goldman Sachs Anticipates Federal Reserve's Maiden Rate Cut in Q3 2024, Reports Reuters

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