ETFs Approved, Keep an Eye on These Levels!

After years of anticipation, the moment for the Spot BTC ETF has finally arrived!

As people prepare to celebrate the long-awaited approval, what is less certain is the impact to BTC price in the short term. Some believe this will be a "sell the news" event, while others are ready to pick up the new ATH.

We don't all have a crystal ball for fortune-telling, but here's my take on the next few days and weeks. We start with the first day's fund flows.

First Day Fund

Flows Estimates of first-day flows into this Spot BTC ETF are wide-ranging. Based on several sources, I peg the range of expectations between ~$750 Million to $4 Billion in the first few days. The numbers differ depending on who you ask.

For example, Bloomberg ETF analysts believe that the total pool of assets under management of Spot BTC ETFs could touch $4 Billion on the first day of trading.

BlackRock itself stated that it has raised ~$2 Billion in seed capital for their BTC ETF (IBIT). And if it can attract another ~$150 Million in organic demand, BlackRock could easily climb to the top of the "First Day Successful ETF Launch" record.

Source: Bloomberg by Eric Balchunas

The market is always looking to the future, and its biggest reaction is when new information deviates from previous expectations.

If preliminary data shows inflows in excess of this upper range, additional demand could trigger buying pressure and higher prices (although some of these inflows may come from existing BTC investors). Large inflows make for popular headlines, and that brings more people to the party with us.

However, the flip side also applies. If the inflows are disappointing, BTC could correct as long as the initial hype fades. And BTC happens to be close to its resistance level.

Bitcoin Cycle Price Pattern

BTC has not experienced a significant correction since its post-FTX collapse rally. In previous market cycles, BTC broke out of a certain level before hitting a "local top".

So, the price of BTC might be able to rise even more bullishly to the $50,000s before hitting a "local top". This could be the point to experience a post-ETF approval price consolidation.

Every bull market goes through a period of consolidation. It's painful, but important for the foundation of the next bigger and higher momentum.

If we follow the same pattern as previous cycles, I predict there will be a period of consolidation during the first half of 2024.

That's healthy to prepare for the next bull market rally. If the price then breaks cleanly above ~$57,000, the next point is the retest of the ATH of the last cycle (~$70,000). Maybe BTC prints a new ATH at the end of 2024?

BTC to ETH rotation

The timing of the BTC ETF approval is also in line with people's expectations about the ETH/BTC "local bottom".

ETH will get more attention as the next in line for Spot ETFs. We are already starting to see early signs of a rotation to ETH, plus decent fund flows have been attacking ETH the past few weeks.

So, the enthusiasm to accumulate ETH ahead of the news of its ETF approval could be similar to BTC yesterday. Especially if liquidity conditions remain good and favorable.

Concluding Thoughts

The real positive trigger is that this new ETF product will be launched during a better macro environment (liquidity) than 12-18 months ago.

And if our 2024 liquidity outlook is accurate, this could add a "turbo" boost to fund flows. While I am bullish on the Spot BTC ETF approval and the interest of potential investors, what is more important is the positive impact of the global liquidity situation.

Caution and FOMO will be caused by the high-flying price trend of crypto assets.

The Spot ETF is definitely a positive boost for BTC and the crypto market in the long run. Funnily enough, it's not just crypto enthusiasts who will be "promoting" these assets now. There will be an army of professionals in suits and ties marketing this new crypto product.