SEC Approval of BlackRock Bitcoin ETF - Fake News and Market Manipulation
What happened? What was the cost? Trading news events? What is bullish about an ETF? What now?
We had our first interesting day in the Bitcoin market yesterday. It’s been a long, dead episode of absolute nothingness and indecisive chop. I felt inspired to write about such news-driven trading days, so here it is.
What happened?
Cointelegraph announced that the U.S. Securities and Exchange Commission (SEC) had approved the first spot Bitcoin ETF from BlackRock.
When the news broke out, the price pumped. A lot.
All the punters, influencers, and Crypto Twitter (now X, so CX?) in general pounced on the news. Bulls unite, sort of thing.
The source was dubious, and since there were no real collaborating sources apart from the ones who were just joining the bandwagon based on the original message, many have questioned the validity of the news.
Turns out they were right. It was indeed fake news, and Cointelegraph first amended the news by adding “reportedly” and then deleted the post altogether.
As the price skyrocketed, thousands of short traders were stopped out, resulting in a short squeeze and over a hundred million in losses due to liquidations.
The price reversed back to where it was basically, and we are now left with one ugly chart!
Here are the aftermath statement from Cointelegraph and a lovely warning from the SEC.
My personal accounting of this event.
I was positioned for a long this morning as the price made its first pump. I like the pullback game, so after a really long time, I wanted a piece of the pie.
Sadly, my order wasn’t picked up. I blame the fake news event, not my overprotective entries that are always about as pessimistic/optimistic as possible. Na ah, it can’t be my fault! The market scammed me. I’m the victim here! Sure, ZZ, sure you are.
Did I fall for it? Not really. Not because I’m not susceptible but because I’ve been around the game for too long. There were so many fake announcements, hacks, and news that one doesn’t just believe anything until one gets it from the source itself. Even then, I remain reserved and skeptical. Scars and a complicated history will do that to you. Do I miss out because of that? Of course. Do I care? Not at all.
So, did I make money? No. Did I lose any? Also no. But I hate being front-run on my orders nonetheless. It sucks being right and see the price go as per your plan, only without you.
I avoid trading on news-driven days. Why?
Because:
By the time I hear about it or notice it, the bulk of the move has already been made. I don’t like buying high, so I have no choice but to wait for the pullback.
Most news-driven trades completely reverse their move unless it was game-changing. Immediately or within a few days. I’m not talking about fake news, but news in general.
Buy the rumor, sell the news is a thing and is the right approach most of the time, but not always.
It’s hard to judge the validity of breakout news and assess how the market will react. I hate trading while emotional and making rash decisions, especially on flimsy information.
Emotions run high on such days, over-exaggerations take over, and volatility goes nuts. The latter may be good, but it’s hard to manage risk when the price is all over the place. I prefer the second leg, after a slight cool down.
It’s not really my thing. If I specialized in being well-informed and playing these little breakouts ahead of time, I could make easy money. I’m not, nor do I want to be involved with thousands of insider communication channels and glued to the screens all day long.
The market’s reaction is telling.
What has this reaction told us about the state of the market and what traders think will happen once an ETF is accepted?
It’s quite obvious, isn’t it? Traders perceive ETF as mega bullish. When an announcement comes, the real one, we can expect some mighty green candles. It also tells us that the market is ready to become bullish once again. It’s looking for a reason. That’s the good news.
The bad news comes in three:
The price yet again fully reversed the whole bullish candle — never a good sign.
One small piece of news, a fake one at that, can move the market for 10%. That means we are still sensitive to turmoil and have zero stability as a market.
It wasn’t true.
But why is an ETF so bullish?
See, this is where I disagree with my bullish friends. Perhaps it’s because I don’t see institutions entering the market en mass a good thing. I was there for this exact narrative in 2017, and we all know what happened when the institutions came. Two years of them shorting our asses into oblivion! Coincidence? Perhaps.
But I still don’t believe they’re the good guys in the market and that all of us, smaller fish, will somehow benefit when they start fishing using bombs in the same pond.
As for the ETF itself, I get that it can potentially open the floodgates for big, like massive, ginormous, monstrous money to come and buy up all the Bitcoin. I do. I’m not entirely sure that’s a good thing, and I’m not convinced they’ll buy those pumped-up prices.
Smart money is called “smart” for a reason, not because they buy the top from amateurs! Let’s face it: we’re not all getting rich - they are.
Are you up for a game?
You run a pension fund worth one hundred billion and want to invest a few percent into Bitcoin for your investors. An ETF is approved, and you can now legally invest in spot Bitcoin via ETF proxy. Great. The door is open. Hallelujah, about bloody time!
Do you just market buy a few billion, regardless of the timing and price?
Really? It seems kind of irresponsible of you. If I were your boss, you’d have some explaining to do. I thought you were a professional, and you know how to represent your investor's best interest by implementing at least some care and thought into the process. If the process is hammering the green button, even a monkey can do your job!
I may be overthinking this, and every billionaire and hedge fund will just market buy Bitcoin from you, no second thought, because “Lambo, moon, one million US shitcoins for one Orange Magic Internet Money,” but I doubt it.
It’s not impossible if the whole thing would correlate with great timing.
A reawakened bull market or some other developments, we can’t predict at the moment. Sometimes, buying expensive is okay. Bull trends can keep going, and buying high is the name of the game for trend traders.
If I had to guess, though, I would say that a massive inflow of buying from the big guys, the smart money, would happen after a giant dump.
A dump that may or may not have been “secretly” initiated by their very hand. Yes, this sounds much more like our greedy bankers, doesn’t it? Or a conspiracy theory. Take your pick.
I’m sorry. I take that back.
The billionaires will buy XRP from you at one hundred dollars per coin because they, too, believe in the 586-dollar prophecy. (not)
Then again, we have Microstrategy and the Son of the Orange God, Michael J. Saylor, who appears to do precisely that. Whenever he frees up some dollars, he just market buys Bitcoin and yells about it on the internet. Despite his timing issues of late, he seems rather undeterred. Moon, it is—decades in between matter not, for the great messiah.
And let’s not forget Elon the Doggy Lord Musk. He’s definitely the kind of guy who would spend a few hundred million market buying Dogecoin just for kicks and giggles while drunk, playing a video game where a cat eats his character. “Revenge, gulp, be upon thee, felines of the world! Sik em, Doggo, sik em! Buy it all!”
So, now what?
Let us again feast our eyes on this turd of a chart. So ugly and stinky one is tempted to call it art!
On a serious note, I’m completely divided between two extremes.
It’s high time for BTC to go up, and I’m bullish.
October greenery, halving approaching, ETF imminent, and there is an argument to be made that with the whole geopolitical situation, Gold and perhaps “the internet gold” would profit.
I can even paint a bullish picture on the chart. See - bullish!
However, I remain skeptical of us getting out of this without scars and holes in our wallets.
There must be billions of longs, and spot buys accumulated from the last couple of months. When have we ever been allowed to keep those?
Not to mention that the global situation is not looking good for the markets. Bitcoin has been more correlated with stocks (the ones that aren’t bullish) than with Gold lately. If financial markets fall, which sort of seems a given in the near future (Nothing is given or certain!), companies start firing people, and war extends to even more fronts, I struggle to see how this is now bullish for Bitcoin and how everyone will now invest in this (still) ultra speculative asset.
An asset I like and might actually serve them well in such scenarios (war, inflation), but I just don’t think “the masses” are there yet.
Perhaps in ten years. Honestly - hopefully, in ten years and not before. Because while we all want to see Bitcoin make it big, we don’t want a world where one Bitcoin is suddenly worth a million dollars. Not because of Bitcoin but because of what that means has happened to the world and the economy. Be careful what you wish for comes to mind.
Stay safe out there!
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