MAC_D
2 Scenarios Before Bitcoin Spot ETF Approval and How to Respond
Chart 1. Looking at the 1-day to 1-week holder ratio chart, the ratio has recently spiked to 6.74%. These are short-term investors, and when their ratio increases, the market tends to show short-term overheating. My personal market overheat threshold is 8%, and while we haven't reached it yet, we're sure to see more price volatility when the spot ETF approval results are announced. Upside scenario If Bitcoin rises to $48.5k, the percentage of 1-day to 1-week holders is likely to rise above 8%, which indicates an overheated market and is more likely to see a correction than a further rise. This is because, according to Chart 2. Average unit price by holding period (2-3 years), $48.5K is the average unit price of 2-3 year holders, which is the only losing group among all Bitcoin longterm and shortterm investors, and their average unit price is likely to be the main resistance. Bearish scenario Bitcoin has seen a 20-30% decline in the past when rallying upwards, so it is likely that we will see a price correction of this magnitude, and if the price declines, $34K and $30K are likely to be the main support levels. The reason is that if you look at the average unit price by holding period chart in Chart 3, the 1 week to 3 months, 18 months to 2 years holders are at $34k, and the 3 to 12 months holders are at $30k. Therefore, a drop to their average unit price is more likely to generate buying pressure than selling pressure. Conclusion With the approval outcome just around the corner, risks are increasing as uncertainty grows, so we don't think it's necessary to take on too much upcoming risk. As a result, we believe that Bitcoin is likely to have a small upside and a large correction at this situation, so it is worth increasing the cash portion of your portfolio and preparing for volatility.