Bitcoin Faces Challenges Following ETF Approval
Bitcoin has experienced a decline of 9% since the U.S. Securities and Exchange Commission (SEC) approved the trading of bitcoin exchange-traded funds (ETFs) on January 10. According to Wolfe Research, this is just the beginning of what could be a disappointing first quarter for the cryptocurrency. Wolfe’s Rob Ginsberg suggests that bitcoin now faces resistance on multiple fronts and predicts a period of consolidation and decline. He advises taking some profit at current levels as bitcoin is overbought based on the relative strength index (RSI) divergence and deteriorating momentum. However, while bitcoin struggles, ether has risen by 12% since January 10.
Ether Takes the Lead
Ether has outperformed bitcoin in terms of price movement, with a 90% increase in 2023 compared to bitcoin’s 157%. Investors have sold off their bitcoin holdings following the ETF approval news and turned to ether, which still offers good opportunities. Wolfe Research predicts that ether will continue to lead the crypto market over the near- to mid-term. The cryptocurrency has shown rapid improvement since October when it experienced a fake breakdown. Currently trading at around $2,500, ether’s next major resistance level is projected to be above $3,500. Investors are also awaiting the SEC’s decision on spot ether ETFs.
Hot Take: Bitcoin’s Challenging Path Ahead
Following the approval of bitcoin ETFs, bitcoin has faced obstacles in maintaining its price momentum. Wolfe Research suggests that resistance from multiple sources may result in consolidation and decline for the cryptocurrency. With overbought conditions indicated by the RSI divergence and deteriorating momentum, taking profit at current levels is recommended. However, there are still promising opportunities in other cryptocurrencies such as ether, which has shown strong performance and is predicted to lead the market in the near- to mid-term. Investors eagerly await the SEC’s decision on spot ether ETFs as they anticipate further developments in the crypto market.
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