The cryptocurrency world has been abuzz after the price of the flagship cryptocurrency Bitcoin surpassed the $40,000 mark late last year and topped $445,000 earlier this year before enduring a slight correction.
Bitcoin’s price has been rising on expectations a spot Bitcoin exchange-traded fund (ETF) could soon be approved to trade in the United States, which to proponents could bring in new institutional investors to the sector, as such an ETF allows investors to gain exposure to the cryptocurrency without having to manage a wallet or its private keys.
The cryptocurrency market, however, has recently endured a steep correction after a report by Matrixport, a prominent firm in the crypto and financial services sector, indicated that the much-anticipated approval of a spot Bitcoin exchange-traded fund (ETF) in the United States might face a setback this month through a rejection from the Securities and Exchange Commission (SEC).
Despite significant momentum, with major financial institutions managing a collective $27 trillion in assets vying to list such an ETF, the SEC the analysts expect the regulator to reject the proposal this month.
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The report negatively impacted the cryptocurrency market and led to a quick sell-off that shaved over $90 billion off of its market capitalization. According to Santiment data, first reported on by CoinDesk, the drop saw then umber of “buy the dip” mentions on social media rise to 323, the highest level since March 2022.
Crypto enthusiasts often follow the buy the dip strategy, which means they see a price decline as an opportunity to acquire more of the digital currency and keep accumulating. The increase in social media posts urging to buy the dip implies that the market is optimistic, but in the past, this has often signaled further price declines.
During the 2021 rally, every time the buy-the-dip sentiment surged, prices dropped more in the next days or weeks, according to the data. The downtrend only reversed when the mood became less bullish or even bearish.
Notably a research note titled “All-time high CME premiums ahead of ETF verdict” from K33 Research’s Senior Analyst Vetle Lunde and Head of Research Anders Helseth has suggested that the launch of a spot Bitcoin ETF will be a “sell the news” event.
Featured image via Unsplash.
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- Source: https://www.cryptoglobe.com/latest/2024/01/bitcoin-btc-price-sell-off-sparks-buy-the-dip-frenzy-on-social-media-amid-etf-hopes/
