Introduction
As the cryptocurrency community eagerly awaits the SEC's decision on pending bitcoin ETF applications, the possibility of approval has sparked discussions on how it may impact the market. With Bitcoin's price experiencing significant growth over the past year, some market participants speculate that this rise may have been fueled by anticipation of the approval announcement. This article explores the concept of a "buy the rumor, sell the news" scenario and analyzes the potential implications of a Bitcoin ETF approval on price dynamics.
The "Buy the Rumor, Sell the News" Phenomenon
The phenomenon of "buy the rumor, sell the news" is commonly observed in financial markets, where asset prices tend to increase in anticipation of significant events. In theory, if investors have access to sufficient information, the market price of an asset should already reflect the expected outcome of such events. However, once the event becomes public knowledge, some investors may choose to sell their shares to realize gains. This could be due to the market overestimating the impact of the news or simply because investors are taking profits. This pattern is particularly relevant in the volatile and sentiment-driven cryptocurrency market, where news and expectations can greatly influence prices.
Analysts' Perspectives on Bitcoin ETF Approval
Senior Analyst Vetle Lunde from K33 Research suggests that the Bitcoin ETF approval could be a sell-the-news event, estimating a 75% probability. Lunde points out that traders are heavily exposed ahead of the verdict, with derivatives showing significant premiums following Bitcoin's recent upward momentum. A sell-the-news event could become a self-fulfilling prophecy as some short-term market participants are eyeing it as an opportunity for profit-taking.
Historical examples also shed light on the potential impact of an ETF approval. In 2017, Bitcoin's value reached its peak at $20,000 after the launch of Bitcoin futures by the CME Group. Similarly, in 2021, Bitcoin surged to $65,000 following Coinbase's successful IPO but saw a subsequent decline in value.
Capriole Investments advises caution in the lead-up to a potential ETF approval, anticipating short-term sell-the-news price action. While short-term upside may be limited, they believe the approval will be a major catalyst for long-term capital flows into Bitcoin.
Long-Term Outlook and Investor Sentiment
Analysts emphasize the importance of considering different time frames when evaluating the impact of an ETF approval. While some investors may have already entered the market based on the potential of these approvals, it is crucial to assess the buying activity that follows the approvals and launches. This is when the real buying starts, according to Michael Anderson of Framework Ventures.
Overall, the sentiment among analysts is that an ETF approval would have a bullish effect on Bitcoin over longer time horizons. However, the immediate market reaction to the news remains uncertain.
Conclusion
As the SEC's decision on Bitcoin ETFs draws closer, market participants are contemplating the potential market impact and the likelihood of a sell-the-news event. The "buy the rumor, sell the news" phenomenon suggests that the market price of Bitcoin may have already factored in the expected outcome of an approval. However, once the news becomes public, some investors may choose to sell their shares, leading to short-term price volatility. Analysts emphasize the importance of considering different time frames and expect an ETF approval to bring long-term capital flows into Bitcoin. Share your thoughts and opinions on whether a Bitcoin ETF approval would be a sell-the-news event in the comments section below.
Frequently Asked Questions
Is gold buying a good retirement option?
Although it may not look appealing at first, buying gold for investment is worth considering when you consider the global average gold consumption per year.
The best form of investing is physical bullion, which is the most widely used. However, there are many other ways to invest in gold. You should research all options thoroughly before making a decision on which option you prefer.
If you don't want to keep your wealth safe, buying shares in companies that extract gold and mining equipment could be a better choice. If you are looking for cash flow from your investment, buying gold stocks will work well.
You can also invest your money in exchange-traded fund (ETFs), which give you exposure to the gold price by holding securities related to gold. These ETFs usually include stocks of precious metals refiners or gold miners.
What Is a Precious Metal IRA?
An IRA with precious metals allows you to diversify retirement savings into gold and silver, palladium, rhodiums, iridiums, osmium, or other rare metals. These rare metals are often called “precious” as they are very difficult to find and highly valuable. They are great investments for your money, and they can protect you from inflation or economic instability.
Precious metals are often referred to as “bullion.” Bullion refers to the actual physical metal itself.
You can buy bullion through various channels, including online retailers, large coin dealers, and some grocery stores.
You can invest directly in bullion with a precious metal IRA instead of buying shares of stock. This ensures that you will receive dividends each and every year.
Precious Metal IRAs don’t require paperwork nor have annual fees. Instead, your gains are subject to a small tax. You also have unlimited access to your funds whenever and wherever you wish.
Which precious metals are best to invest in retirement?
Silver and gold are two of the most valuable precious metals. They're both easy to buy and sell and have been around forever. You should add them to your portfolio if you are looking to diversify.
Gold: Gold is one of man's oldest forms of currency. It's stable and safe. It is a good way for wealth preservation during uncertain times.
Silver: Silver has been a favorite among investors for years. It's a great option for those who want stability. Silver is more volatile than gold. It tends to rise rather than fall.
Platinium: Platinum is another form of precious metal that's becoming increasingly popular. It's durable and resists corrosion, just like gold and silver. It's however much more costly than any of its counterparts.
Rhodium: Rhodium is used in catalytic converters. It is also used as a jewelry material. It is also very affordable in comparison to other types.
Palladium (or Palladium): Palladium can be compared to platinum, but is much more common. It's also much more affordable. Investors looking to add precious and rare metals to their portfolios love it for these reasons.
How much gold should your portfolio contain?
The amount you make will depend on the amount of capital you have. A small investment of $5k-10k would be a great option if you are looking to start small. Then as you grow, you could move into an office space and rent out desks, etc. This will allow you to pay rent monthly, and not worry about it all at once. You only pay one month.
Also, you need to think about the type of business that you are going to run. My company is a website creator. We charge our clients about $1000-2000 per monthly depending on what they order. You should also consider the expected income from each client when you do this type of thing.
As freelance work requires you to be paid freelancers, your monthly salary won't be as high as mine. So you might only get paid once every 6 months or so.
You must first decide what kind and amount of income you are looking to generate before you can calculate how much gold will be needed.
I recommend starting with $1k-$2k in gold and working my way up.
What is the Performance of Gold as an Investment?
Supply and demand determine the gold price. It is also affected negatively by interest rates.
Gold prices are volatile due to their limited supply. Physical gold is not always in stock.
Statistics
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
External Links
law.cornell.edu
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement funds
cftc.gov
wsj.com
- Saddam Hussein’s InvasionHelped Uncage a Bear In 1989 – WSJ
- Are you interested in keeping gold in your IRA at-home? It's Not Exactly Lawful – WSJ
finance.yahoo.com
How To
The History of Gold as an Asset
From ancient times to the beginning of the 20th century, gold was used as a currency. It was widely accepted around the world and enjoyed its purity, divisibility and uniformity. In addition, because of its value, it was traded internationally. However, since there were no international standards for measuring gold at this point, different weights and measures existed worldwide. One pound sterling in England was equivalent to 24 carats silver, while one livre tournois in France was equal 25 carats. In Germany, one mark was equivalent to 28 carats.
In the 1860s, the United States began issuing American coins made up of 90% copper, 10% zinc, and 0.942 fine gold. This resulted in a decline of foreign currency demand and an increase in the price. The price of gold dropped because the United States began to mint large quantities of gold coins. Because the U.S. government had too much money coming into circulation, they needed to find a way to pay off some debt. They sold some of their excess gold to Europe to pay off the debt.
Many European countries began accepting gold in exchange for the dollar because they did not trust it. Many European countries started to accept paper money as a substitute for gold after World War I. The gold price has gone up significantly in the years since. Even though gold's price fluctuates, it is still one of the most secure investments you could make.
—————————————————————————————————————————————————————————————–
By: David Sencil
Title: Bitcoin ETF Approval: Anticipating Market Impact and Sell-The-News Event
Sourced From: news.bitcoin.com/experts-weigh-in-on-bitcoin-etf-approval-as-sell-the-news-event/
Published Date: Fri, 05 Jan 2024 20:30:27 +0000
Leave a Reply