The Not-So-Quiet Before the Real ETF Storm

by Beth Canova
By Beth Canova

With anticipation over the potential spot Bitcoin (BTC, “A-”) ETF approval reaching a fever pitch, investors are at the edge of their seats.

So, it’s no wonder that yesterday’s X hack sent everyone into a tizzy.

In case you missed it, the X — formerly Twitter — account of the U.S. Securities and Exchange Commission posted a controversial xeet. It informed the world of the approval of a spot Bitcoin ETF shortly after 4 p.m. Eastern Tuesday.

Bitcoin rushed up to a peak of $47,600 before traders “sold the news” and pushed Bitcoin back down to $46,300 … all in about 10 minutes.

The trading action wasn’t a surprise. Juan Villaverde has been telling you that we could see profit-taking after the news broke.

However, the news was fake!

Less than a half hour after the hacked xeet was posted, SEC Chair Gary Gensler wrote:

Click here to see full-sized image.

 

This wave of negative sentiment and confusion sent BTC even lower, to roughly $45,528 by 4:30 p.m. 

It spent Wednesday in a downtrend, with the price at the time of writing near $45,187. Though much of the volatility of that first half hour has since settled.

Whether or not this was a trial run for what we will see upon an actual Bitcoin ETF approval remains to be seen. 

What we do know is that this was not the auspicious start to a new era in crypto trading that many believe the spot ETF could usher in. 

But that doesn’t mean we’re not at the start. 

The Case for a Spot Bitcoin ETF Approval

Many may consider yesterday’s hack to be the end of the story. We don’t.

Today is the last day for an approval in this round. By the end of business on the East Coast, we should know whether the SEC will approve, reject or delay its decision on a spot Bitcoin ETF.

We remain hopeful that an approval could come as soon as the end of today. And according to a recent Reuters article, many in the industry agree with us. 

But we’re not basing our outlook on sheer optimism.

Nor is it based on what we want to happen. 

Our outlook is based solely on the facts we have.

Starting with a shocking announcement earlier today by the Chicago Board Options Exchange.

The CBOE issued a request to the SEC for an accelerated S-1 approval (the first step in the process) for the ARK 21Shares Active Bitcoin Futures Strategy ETF.

This is highly unusual. 

Normally, a request to accelerate the process wouldn’t be submitted until after approval of the exchange filings — Form 19b-4, which would be the next step.

Scott Johnsson, a finance lawyer and general partner at Van Buren Capital, gave an interesting theory to explain the CBOE’s unusual choice:

Click here to see full-sized image.

 

Additionally, there’s the behavior of the applicants themselves.

The firms waiting on their ETF approvals have started to finalize their fees. That’s usually one of the last steps before a launch. 

VanEck has taken things further by buying $72.5 million worth of BTC to back its ETF. And rumors are swirling that others are following suit.

That means these Wall Street giants are literally putting their money where their mouths are. And whether in TradFi or crypto, savvy investors know to follow the smart money.

The Aftershocks and 3 Ways to Get Through Them

So, what happens if a Bitcoin ETF is approved today?

Likely, an uptick in volatility. 

It’s impossible to tell ahead of time whether Bitcoin will shoot to the moon should the full impact of an ETF approval not already be priced in … or if it’ll plummet as traders rush to sell the news.

Yesterday’s fake-out interestingly showed an immediate spike followed by a subsequent fall, even before the xeet was revealed to be a farce. 

But that downside action yesterday, plus the long squeeze last Wednesday, may have weakened any future appetite for selling.

In the face of uncertainty like this, it’s vital to keep calm and maintain your strategies. Here are three important things to remember:

  1. Don’t let optimism or fear run away with your good sense. Stick to the entry and exit prices you’ve set for your trades to avoid an emotional response. Wait for verifiable facts before buying or selling.
     
  2. Don’t invest more than you can afford to lose.
     
  3. And, as always, keep your crypto in your custody with your own wallet. 

Times like this can be tough to navigate. Even for those of us who’ve suffered the slings and arrows of crypto volatility before.

But that’s why our team is here to help guide you through it.

In fact, Weiss Crypto Portfolio editor Juan Villaverde recently released his Crypto Convergence briefing. There, he details the three volatility catalysts he foresees this year, with one of them being the spot ETF approval.

In the briefing, he explains how these three catalysts are set to converge, sending Bitcoin — and thus the broad market — even higher.

He also names three altcoins that folks should want to own before this convergence happens. 

With the first event set to happen as soon as this afternoon, I suggest you watch it now.

Best,

Beth Canova

About the Contributor

Beth Canova is a veteran of the publishing industry, specializing in cryptocurrency-related information and guidance. As the Managing Editor of some of world’s most astute cryptocurrency experts — Juan Villaverde, Dr. Bruce Ng, Marija Matić and others — she's continually immersed, and well versed, on everything crypto.

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