Economist Alex Krüger, who is widely respected in the field, has expressed concerns for Bitcoin (BTC) traders. According to Krüger, the approval of a spot market exchange-traded fund (ETF) could potentially lead to a crash in the price of the popular cryptocurrency.
In an extensive thread on the social media platform X, the analyst conveys his belief to his significant following of 158,900 individuals. He predicts that if the U.S. Securities and Exchange Commission (SEC) approves spot market Bitcoin (BTC) ETFs, it will result in a 'sell-the-news' event.
Based on Krüger's analysis, he anticipates that the leading cryptocurrency by market capitalization will experience an initial surge following the anticipated approval in January. However, he also expects that this rally will be accompanied by profit-taking, suggesting a potential decrease in price after the initial rise.
"Bitcoin ETF base case scenario:
#1 When: Jan 8th-Jan 10th
#2 Immediate reaction: up on approval (rationale: currently 90% priced-in)
#3 Follow-up: drop below pre-approval point into launch ~2 weeks later, cleaning up all late levered monkeys (rationale: market [is] very hot now, with altcoins funding in the 20-60%, and Bitcoin’s March futures annualized basis around 17-20%).
Note there is no official date for the launch, it could be days after approval, or much later, though given how many ETFs are in the race sooner rather than later makes more sense.”
According to the economist, if there are significant inflows of funds following the launch of an ETF, it could potentially contribute to an upward movement in Bitcoin's price. However, the economist also cautions that if the inflows are weak or if the ETF bids are rejected, it has the potential to cause a sharp decline in the value of the leading digital asset.
"#4 Post-launch: strong inflows/volume re-establish the upwards trend (or, if weak, send prices crashing, as front-runners need to dump into few bids). Be warned that if by chance the ETF gets rejected, prices will rapidly collapse. Good idea to have alerts on in January.”
Bitcoin is trading for $42,529 at time of writing, a marginal increase during the last day.
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