Spot Bitcoin ETF Approval Draws Near
With the approval of a Spot Bitcoin ETF imminent, many traders are eagerly anticipating a surge in the price of $BTC. However, caution is advised as bearish divergence is being observed on the longer term price charts.
Sell the News Event
It is worth considering the possibility of a ‘sell the news’ event, where positive news is followed by a period of selling. This can result in traders being shaken out of their positions, particularly if leverage is involved.
Bearish Divergence Forms
There are concerning signs of bearish divergence forming on the daily, weekly, and other time frames. This creates uncertainty as the Spot Bitcoin ETF announcement approaches, raising the possibility of a negative outcome.
Source: Trading View
The divergence is evident on the daily time frame, with the bitcoin price increasing while the Relative Strength Indicator (RSI) falls.
Beware of Prolonged Divergence
Source: Trading View
The bearish divergence is present on multiple time frames, which is a cause for further concern. However, it’s important to note that divergence can persist for long periods of time before triggering a price drop or being invalidated.
Despite the bearish divergence, there is still potential for bitcoin to continue its upward momentum. Breaking resistance at $44,000 could pave the way for a price target of $48,000 to $50,000.
Hot Take: Approaching Spot Bitcoin ETF Approval with Caution
As the approval of a Spot Bitcoin ETF draws near, traders are excited about the potential for a price surge. However, it is crucial to exercise caution due to the presence of bearish divergence on the longer term charts. The possibility of a ‘sell the news’ event and the formation of bearish divergence create uncertainty and could result in a period of selling. While bitcoin still has room for growth, surpassing the resistance at $44,000 will be a key milestone to watch. It remains to be seen how the Spot Bitcoin ETF approval will impact the market, so trade carefully and stay informed.
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