Bitcoin Faces ETF Cash-Out Risk, But Halving to Become New Catalyst for BTC Price Surge

Last week (10/23-10/29), the cryptocurrency market continued its rebound and upward trend.

During this period, the total market capitalization increased from $1.14 trillion to a high of $1.26 trillion, a rise of 10.52%, approaching the previous highs in April and July of this year, marking the third attempt to challenge $1.28 trillion.

The market sentiment index rose from 55 to 70, reaching a new high for the year, indicating a further deepening of greed.

Crypto Total Market Cap (yellow) and Fear Greed Index (blue) trends (01.01.2023-10.29.2023); Source: MacroMicro.

Major cryptocurrencies continued to rise, but at a slower pace, with some even experiencing pullbacks. Avalanche (AVAX) performed the strongest, up 8%, followed by Cardano (ADA) with a 5% increase.

Bitcoin Cash (BCH) and Uniswap (UNI) performed the worst, both declining by about 5%.

Performance in Major Cryptocurrencies (10.23.2023-10.29.2023); Source: MacroMicro.

In addition, the price of Bitcoin (BTC) rose by 4%, and its market share increased by 2%, maintaining a 53% dominance. Ethereum (ETH) saw a 2% price increase, and its market share also rose by 2%, maintaining a 19% dominance.

With significant progress made by BlackRock and Grayscale, the approval of Bitcoin spot ETFs is no longer a distant and vague possibility; it is now considered a highly likely event in the market.

On October 26th, JPMorgan stated that multiple Bitcoin spot ETFs are expected to receive approval within a few months.

Cantor Fitzgerald, a US financial services company, expressed increasing confidence in the approval of Bitcoin spot ETFs.

Anthony Rousseau, Head of Brokerage Solutions at TradeStation, even stated that the market has already priced in positive outcomes for Bitcoin spot ETFs.

Summer Mersinger, Commissioner of the US Commodity Futures Trading Commission (CFTC), stated that the market is prepared for the listing of Bitcoin spot ETFs.

However, there are dissenting voices, such as former SEC lawyer Tom Gorman. He believes that the approval of Bitcoin spot ETFs by the SEC is not guaranteed.

XiXi, Founder of blockchain consulting firm Venn Link Partners, stated that if a US Bitcoin spot ETF is approved, there will be short-term selling pressure.

Peter Schiff, Founder of Euro Pacific Capital, stated that the final approval by the US Securities and Exchange Commission (SEC) will end the rise of Bitcoin spot ETFs.

Hayden Hughes, Co-founder of trading platform Alpha Impact, even suggested that the market has already absorbed the news of the approval of Bitcoin spot ETFs.

In the short term, Bitcoin lacks anticipation and upward momentum in terms of ETFs; it may even face profit-taking and selling pressure, leading to a decline in BTC price. In fact, this can be seen in the recent price trend of Bitcoin.

BTC has not continued to reach new highs but instead has gradually formed lower highs, indicating a lack of strength in its upward movement. In such situations, if multiple attempts to reach new highs fail, a significant pullback often follows unless new positive news stimulates the market.

Bitcoin 4-hour price chart; Source: TradingView.

Currently, Bitcoin is consolidating at high levels and has started to fall below the 7-day moving average. It remains distant from the 30/60/120 moving averages, lacking support levels, and faces the risk of a short-term pullback to $31,000. In extreme cases, such as unexpected negative news from the SEC, it could even drop below $31,000 and test $25,000.

Bitcoin daily price chart; Source: TradingView.

Although it is difficult for spot ETFs to inject new upward momentum into BTC, the halving event may become the next catalyst. According to data, as of October 30, 2023, there are less than 177 months remaining until the next Bitcoin halving, which is less than six months.

Bitcoin Halving Countdown; Source: OKLINK.

In the past, ETFs captured market attention, but currently, they have weakened or even faded. Attention is likely to shift towards the concept of halving for speculative trading. Therefore, it is important to be prepared in advance and respond accordingly to avoid missing out on periodic market opportunities. 

In fact, based on historical experience, there tends to be a wave of trends in the six months leading up to the halving event, followed by a significant sell-off shortly before the actual halving, and then a major bull market follows.