The Impact of Spot Bitcoin ETFs on BTC Price is Diminishing!

• Bitcoin price experienced strong volatility on January 9th, Tuesday, due to fake news about a Bitcoin ETF approved by the SEC.
• The misleading news spread by the SEC had a dual effect. Firstly, it became evident to most investors that the impact of the ETF on BTC is limited.
• Despite reaching new highs, block transactions, a significant aspect of market dynamics, remained quite limited.

Following the dissemination of false news about a spot Bitcoin ETF, the high volatility in BTC price made the market even more precarious!

Diminishing Impact of Bitcoin ETFs

Bitcoin price experienced strong volatility on January 9th, Tuesday, due to fake news about a Bitcoin ETF approved by the SEC. After rising to $48,000 on Tuesday, Bitcoin’s price settled back to $46,000. The recent incident of fake news regulated by the SEC affected the volatility of Bitcoin (BTC) and led to a development more peculiar than expected.

The sudden volatility resulted in a significant increase in RV (Realized Volatility), but surprisingly, IV (Implied Volatility) experienced a slight decrease. The logic behind this data deviates from the norm because of the active trading of the ETF for months; many investors are betting on its performance, causing short-term IV to reach recent highs, as reported by Greeks.Live.

The misleading news spread by the SEC had a dual effect. Firstly, it became evident to most investors that the impact of the ETF on BTC is limited. Secondly, it further dampened the already fragile market momentum, encouraging many investors to engage in deleveraging operations, reduce positions, and adopt an early ‘sell the news’ strategy.

Mixed Signals in the BTC Market

Speculation about the imminent approval of the Bitcoin Exchange Traded Fund (ETF) triggered the FOMO sentiment, causing Bitcoin to rise to $47,000 during US trading hours. However, the options market paints a complex picture. Short-term Expected Volatilities (IVs), especially the At The Money (ATM) option IV valid for June 11th, dropped below 90% with a sudden decrease of over 30% within a few hours. Other terms in the options market also showed significant declines.

Despite reaching new highs, block transactions, a significant aspect of market dynamics, remained quite limited. The market saw a dominance of selling calls and buying options during this upswing. Interestingly, questions arise about the future trajectory of Bitcoin when institutional investors begin to trim their exposure to the ETF market at its peak momentum. Mixed signals in the options market and block transactions add uncertainty to the overall picture, leaving investors closely monitoring developments in the Bitcoin market.