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Why has the Price of Bitcoin Fallen?
It's been another evenful week in the cryptocurrency markets.
On Wednesday, January 10th, the Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETF applications. The day after, Bitcoin's value fell and has continued to fall by more than 12% (since the 2-year high of $48,600).
Buy the Rumor, Sell the News.
If you are not familiar with the adage "Buy the rumor, sell the news" is a common phrase in trading that refers to the tendency of a securities' price to rise on the anticipation of an event (the rumor) and then fall after the actual event occurs (the news).
The recent drop in the price of Bitcoin after the announcement of the approval of the Spot Bitcoin ETFs by the SEC is a textbook example of Buy the Rumor and Sell the News and is a well-known phenomenon that is largely driven by market psychology and the speculative nature of traders.
Let's break this down and relate it to the recent decrease in the price of Bitcoin concerning the Spot Bitcoin ETF.
Buy the Rumor
- Anticipation Phase: In the context of Bitcoin and the Spot Bitcoin ETF, the "rumor" is the market speculation or anticipation that a Spot Bitcoin ETF would be approved. The market perceives such an approval as a bullish signal, potentially increasing the accessibility of Bitcoin to a broader range of investors and, hence, increasing demand.
- Price Inflation: Leading up to the decision, traders and investors started buying Bitcoin, driving the price up. This buying is not based on the event itself (the approval of the ETF) but on the speculation or 'rumor' that the event will have a positive impact on Bitcoin's price.
Sell the News
- Event Occurrence: When the actual event occurs – in this case, it's the approval of the Spot Bitcoin ETF by the SEC. Once the market receives some concrete information – the news is out, and the speculative element is no longer in play.
- Profit Taking: Those who bought Bitcoin based on speculation might start selling their holdings to realize profits. This is particularly true if the news meets the market's expectations but does not exceed them. The mindset here is that since the anticipated event has occurred, the bullish run-up might not continue much further, and it's a good time to cash in on the gains.
- Price Correction: This selling pressure can lead to a decrease in the price of Bitcoin. The decrease is not necessarily because the news is bad, but because the market is readjusting after the speculative run-up (the news has been worked into the market price of Bitcoin). The new price is seeking a balance point where speculative buying is replaced by more fundamental, long-term investing decisions.
In any case, while "Buy the rumor, sell the news" is a pattern observed in many markets, it's essential to approach each situation with a comprehensive analysis, considering all market dynamics, not just speculative behavior.
We can likely see the price of Bitcoin go below $40,000 before correcting again offering an opportunity to get into the market before the price increases again.
It's still not too late to get into the market as the Bitcoin Halving Event is just around the corner.
Bitcoin Halving Event:
There are less than 95 days before the next Bitcoin halving event which has been the catalyst for every single bull run!
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Join Us - As We Accumulate
Now is still an excellent time to get into the market while prices are still relatively low. If you want to know what we are buying, you are more than welcome to join us as we share our monthly Altcoin picks in anticipation of the upcoming bull run - You just need to become a member.
Richard.
Top 100 Trending Altcoins:
A significant amount of red in the crypto market (last 7 days).
Today's Crypto Fear & Greed Index:
Today's Crypto Fear and Greed Index = Greed –> Decreased to 56 (from 64 last week).
Bitcoin & Ethereum Price Movement
Bitcoin decreased 3.0% in the last week, currently trading at $41,663. In the previous 90 days, Bitcoin has increased by 34.2%.
Ethereum decreased 2.2% in the last week, currently trading at $2,474. In the previous 90 days, Ethereum has increased by 46.9%.
Global cryptocurrency market capitalization has increased to $1.64T (from $1.68T last week).
Top 100 Gainers - Last 7 Days
Over the last 7 days, the biggest gainers (within the top 100):
Ronin (RON) +36.8% - Ranked #90
Ronin (RON) is the native cryptocurrency of the Ronin blockchain, a sidechain created primarily for the Axie Infinity game to address issues like scalability and high transaction fees on the Ethereum network. The Ronin blockchain is designed for gaming, offering low transaction fees and a high transaction throughput. RON is used for transaction fees, governance, and potentially staking within the network, aiming to ensure security and decentralization through a Proof of Authority consensus mechanism. While initially focused on Axie Infinity, the Ronin blockchain aspires to support a wider range of applications, potentially enhancing RON's utility and value.
Astar (ASTR) +28.1% - Ranked #63
Astar (ASTR) is the native cryptocurrency of the Astar Network, a multi-chain smart contract platform in the Polkadot ecosystem, designed to be a hub for decentralized applications (dApps). It supports the creation of dApps with smart contract capabilities in various programming languages, courtesy of its support for multiple virtual machines like EVM and WASM. Astar's interoperability, powered by Polkadot, enables seamless cross-chain transfers and interactions. A unique feature of Astar is dApp staking, allowing users to support and earn rewards from dApps they back. The ASTR token facilitates transaction payments, governance participation, and staking within the network. Aimed at advancing the DeFi and Web3 spaces, Astar offers a scalable and developer-friendly infrastructure.
Flare (FLR) +27.1% - Ranked #85
Flare (FLR) is the native token of the Flare Network, a blockchain project aimed at introducing smart contract capabilities to cryptocurrencies that don't inherently support them, like XRP. The network is designed for high scalability and speed, enhancing transaction throughput. FLR is used for transaction fees, governance, and within DeFi applications on the network. A key feature of Flare is its interoperability, allowing it to integrate with multiple blockchain networks and broaden its utility. Flare also introduces F-Assets, representations of non-smart contract tokens, enabling their use in smart contracts on the Flare Network. The project gained attention for its Spark token airdrop to XRP holders. While Flare seeks to enrich the blockchain ecosystem by enhancing functionality and interoperability.
Siacoin (SC) +22.4% - Ranked #87
Siacoin (SC) is the cryptocurrency of the Sia network, a decentralized cloud storage platform that offers a secure, private, and cost-effective alternative to conventional cloud services. The network allows users to rent out unused hard drive space or purchase storage, using blockchain to create a trustless storage marketplace. Siacoin facilitates transactions on the network, compensating hosts for providing storage space. The Sia network prioritizes privacy and security through encryption and decentralization, ensuring that only data owners can access their files. It utilizes smart contracts to enforce storage agreements and maintains file redundancy to ensure data availability.
Biggest Micro-Cap Gainers in the last 30 days
We review and analyze small and micro market cap cryptos weekly, looking for the next low-cap gem. These are the best-performing (quality) micro-cap projects over the last 30 days:
Best Performing Quality Micro Caps (Last 30 days):
- RITE +1,659% - Decentralized Entertainment (Nano-Cap)
- METAL +1,314% - Multiplayer shooter game (Nano-Cap)
- KEX +603% - Trustless Computing (Micro-Cap)
- VEE +443% - Protocol for Smart NFT creation (Micro-Cap)
Monthly Altcoin Pick:
In less than two weeks, we will be releasing our latest Altcoin Pick. If you would like access to this and future monthly Altcoin picks, consider becoming a member - It's only the price of a few cups of coffee a month.
Altcoin picks are emailed to members as soon as they are published. If you are wondering how we choose our monthly Altcoin Picks, this is our methodology.
Our Altcoin Picks for the prior months can be found here.
Thanks and appreciation to all our members!
Until the next report,
Richard.
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