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Market Lab Report - BTC & ETH price action after yesterday's false approval is likely to repeat on a real approval

Some have suggested that the approval of the Bitcoin spot ETF is a buy the rumor, sell the news event. Yesterday's event came as a sneak peak into what is likely to happen when the ETF is approved.

The announcement that the SEC had approved the Bitcoin spot ETF was reversed about 15 minutes later when the SEC said their account had been compromised.

SEC Hack Timeline (ET):

4:11 pm — @SECGov  tweets all #Bitcoin ETFs are approved

4:26 — @GaryGensler says SEC account was hacked

~4:38 — SEC “regains control” of their account & deletes original tweet

4:42 — SEC tweets their account was compromised & have not approved ETFs

But 5 min after announcement, BTC sold off. This is 10 minutes ahead of Gensler tweeting that the SEC's Twitter account had been compromised.

While it is clear that ETH rallied on the news even after it was found to be false, if we look at the minute chart of BTC, it seems BTC initially rallied on the news then sold off BEFORE it was revealed the news was fake, at which point, BTC made a major low and bounced. This suggests that aggressive initial buying followed by equally aggressive selling when a spot Bitcoin ETF is approved is likely. Expect great volatility, but after the dust settles, over the long run, this is bullish for Bitcoin.

It will come down to liquidity which has been on the rise since October, fueling stock and crypto markets, but as of the start of the year, has ticked lower. It is likely liquidity will have to continue to rise due to ongoing payments of debt interest on record levels of debt, supporting global conflicts, and honoring unfunded liabilities such as pensions.

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