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Bitcoin Price Drop Triggers 'Buy the Dip' Trend Amid ETF Speculation

2024/01/05 12:02

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The cryptocurrency sphere buzzed as Bitcoin crossed $40,000 last year, soaring to $445,000 earlier this year before a minor correction.

Bitcoin's Price Surge and ETF Prospects

Bitcoin's rise linked to hopes of a spot Bitcoin exchange-traded fund (ETF) approval in the United States. This ETF could lure new institutional investors, providing exposure to Bitcoin without managing wallets or keys.

The market faced a sharp correction following a report by Matrixport, a significant firm in crypto and financial services. The report hinted at a potential setback for the ETF's approval by the Securities and Exchange Commission (SEC).

SEC's Expected Rejection and Market Impact

The SEC is expected to reject the ETF proposal this month despite major financial institutions' interests in listing it.

The report led to a $90 billion market cap drop, with social media mentioning "buy the dip" surging to 323, the highest since March 2022, according to Santiment data.

'Buy the Dip' Strategy and Historical Trends

Crypto enthusiasts often use the 'buy the dip' strategy, viewing price dips as buying opportunities. However, increased social media calls to buy the dip have previously signaled further price drops.

During the 2021 rally, surges in the buy-the-dip sentiment preceded price declines, reversing only when sentiment turned less bullish.

'Sell the News' Prediction for ETF Launch

A research note titled "All-time high CME premiums ahead of ETF verdict" predicts a "sell the news" event upon the spot Bitcoin ETF's launch.

The current surge in "buy the dip" sentiment on social media following the market downturn may indicate potential further price declines, echoing historical trends where increased optimism preceded continued price drops.

Dapatkan pemahaman yang lebih luas tentang industri kripto melalui laporan informatif, dan terlibat dalam diskusi mendalam dengan penulis dan pembaca yang berpikiran sama. Anda dipersilakan untuk bergabung dengan kami di komunitas Coinlive kami yang sedang berkembang:https://t.me/CoinliveSG

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