YEREVAN (CoinChapter.com) – The crypto community has been collectively building up its expectations from the oh-so-desirable Bitcoin spot ETF approval. Voila! The spot ETFs are here! What did Bitcoin do? It didn’t instantly rocket to $100,000, as the naive could hope. The BTCUSD exchange rate plummeted 16% to $41,000 instead, after a volatile week following the ETF approval on Jan 11.
A bit like any other trumped-up expectation, isn’t it? You build it up in your head too much, the disappointment will be right around the corner to kick you in the crotch. But enough with the analogies, let’s look at what actually happened.
The ‘Sell-the-News’ Effect on the Bitcoin Market
The ‘buy-the-rumor-sell-the-news’ phenomenon never fails the crypto nubes, particularly in relation to Bitcoin. It refers to heightened expectations of a certain market event, that may or may not have been trumped up by the event facilitators. Then, after the event actually happens, the euphoria goes up in smoke, and many traders opt for a market exit, as the reality kicks in.
As mentioned, despite the high anticipation and bullish sentiment leading up to the approval of spot Bitcoin ETFs, the actual event led to an unexpected market reaction.
Following the approval, Bitcoin’s price, which had been robustly high, took a downturn, stabilizing around $41,000. This shift exemplifies the classic ‘sell-the-news’ scenario, as the culmination of the widely anticipated event triggered a wave of profit-taking and selling among investors.
The effect stands to underscore the importance of human psychology in trading, and the giant corporations that pushed the approval, like BlackRock, Fidelity, and others, are well aware of it. However, unlike retail market participants, they don’t take investing decisions lightly. Thus, it pays (no pun intended) to take a closer look at the work that went into their involvement in the digital asset realm.
BlackRock’s Significant Role and Market Impact
BlackRock’s involvement in the Bitcoin spot ETF space has been a major trigger for the regulators. As reported earlier, on June 15, BlackRock, the largest asset manager globally with $9.1 trillion under its wing, filed for a Bitcoin spot ETF. At the time the company has over 500 approved ETFs against 1(!) failure.
The circumstances put SEC Chair Gary Gensler on the spot as well, players like BlackRock cannot be denied easily and without consequences.
Notably, in 2021 BlackRock called Bitcoin an “untested asset” with a “very small market.” However, the flagship crypto has since become a tidbit considering its expanding adoption and undervalued price. It doesn’t take a genius to deduce that Bitcoin is experiencing its foray into “big money” like never before.
But big money often comes with big changes, and the community has been divided on the issue of whether fiat interest is beneficial or not.
BlackRock Committed To The Task
Moreover, BlackRock’s decision to seed its Bitcoin ETF with $10 million was a bold move that signified a strong commitment to see its plans through in the cryptocurrency sector. This action, among others, indicates that BlackRock & Co. are not joking around. They recognize the crypto market as a potential ‘pie’ and want a piece of it.
Meanwhile, the path to the SEC’s approval of Bitcoin ETFs has been a long and complex one, with skepticism and stringent regulatory scrutiny sprinkled along the way. BlackRock’s strategic maneuvers, such as establishing a “surveillance-sharing agreement” with Coinbase and filing a substantial application for a Bitcoin ETF, have been pivotal.
So, what now? Did BlackRock bet on the wrong horse? Probably not. Will the Bitcoin plunge last throughout the whole year? Probably not.
BTC price will eventually recover, possibly alongside interest rate cuts that the public counts on. However, it is important to remember that the ‘sell-the-news’ phenomenon can hit the pockets of retail investors harder than the ‘big guns,’ partially because companies like BlackRock count it in and are ready for it.
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