Bitcoin popped up by 10% in the days prior to the SEC giving an OK to ETFs that will track the spot price of Bitcoin. After the OK was given, Bitcoin fell by 20% over the following ten days. Bloomberg noted that as Bitcoin ETF hype wanes there are more Bitcoin ETF hype casualties than just the token itself.
For that matter, this new wrinkle in the world of cryptocurrencies raises the basic question of how to invest in Bitcoin. Will you be in Bitcoin for short term profits or for the long term? Will Bitcoin be the long term store of value that its strongest proponents argue? Or will we be treated to a series of crypto winters over and over again?
Although Bitcoin beat all other investments in 2023 it remains to be seen where the senior crypto token is headed this year. Regulatory pressures persist in the crypto world. And it is unclear whether spot Bitcoin ETFs will be approved and, if they are, if that will cause the Bitcoin surge to continue.
The ratio of puts to calls on Bitcoin have gone up significantly. This tells us that options traders are concerned about Bitcoin’s price falling. This could be because they fear that the SEC will nix all pending spot Bitcoin ETFs or that said ETFs will not cause a rise in Bitcoin’s price.