We’ll be talking about “selling the news” a lot over the next three weeks. Most often, the phrase refers to the price activity after a company releases their earnings. Traders tend to “buy the rumor” and then “sell the news.” It’s one of my favorite trading patterns during earnings season.
But for the first time ever, I get to write about Bitcoin having a “sell the news” selloff, and it has me excited about buying this dip.
Last week, we saw the approval of the first Bitcoin backed ETFs.
The SEC’s approval puts bitcoin in a different light on Wall Street. With its approval, the SEC brought Bitcoin into the mainstream of the investing world. With its approval, the SEC has opened the Bitcoin market to Main Street investors, which means we are likely to see a tidal wave of money move into the asset.
The market knew that this event was coming, so we saw the first “buy the rumor” rally in Bitcoin.
From January 7-11, Bitcoin rallied 11.3% and almost touched the $50,000 price level.
Then the approval came, and along with it the “sell the news” selloff. Bitcoin is now trading 15% lower than those recent highs. The current price: just above $40,000.
The selloff has a lot of people saying that the bull run for Bitcoin may be over.
I disagree… here’s why.
Profit-taking is never bad, and that’s exactly what’s happened over the last week as traders have been selling Bitcoin in the wake of the SEC decision.
We’re seeing a lot of shifts in the derivatives market for Bitcoin as people liquidate their “old” Bitcoin ETFs for the new spot price-based ETFs. That activity will slow over the next few weeks and Bitcoin volatility will level out.
It remains in the strong range its formed since early December. That range is drawn by the low price of $40,000 and the high of $50,000. We’re still in a bullish trend, and that $40,000 price serves as a good price for traders to add to their positions.
Bottom Line
“Sell the news” events are usually short-lived, from five to ten trading days. You’ve still got time to take advantage of Bitcoin’s first ever sell the news…
Don’t let it pass.
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.