One week has passed since the Bitcoin spot ETF was approved.
But most did not expect today's market reaction.
What if I told you everything is all happening according to plan?
Here's what will happen ??
Most crypto traders have been divided in 2 groups on what the spot ETF would do to the market.
1?? Up only traders
2?? Sell the news traders
I believe the post ETF effect is divided in 4 sectors to make up a circle, and after those four sectors are complete it is a rinse and repeat to trap most traders.
And we are currently in sector 2
1?? Small market pump
The first reaction we saw from the market after the approval was a small market pump.
The first sector to trap the "sell the news" traders.
Pump the market so these traders think they are wrong and ape back in.
Pump the market but only a small pump so the "up-only" people think they are right but not enough yet so they can benefit from it (profit taking).
Just only to convince them to hold and not sell high.
They'll be trapped in the next sector.
Sector 1 effect as intended ?
2?? Market dump
The second reaction we saw from the market after the initial pump was a dump.
Sell the news traders that bought back in and the up only traders think they are right.
But now the market is dumping after all?
The up only traders think it was a sell the news after all and start selling once bitcoin moves towards $40k to buy back lower at $30k.
The sell the news traders think the same.
They sell lower than their purchase to recoup the loss by buying at $30k again.
Sector 2 effect ?
3?? Market pumps sooner than expected.
The final flush out.
Both sides of traders are out and patiently anticipating to fully benefit and recoup all losses by buying back at $30k to ride or all up again.
Only however bitcoin doesn't dump to $30k at all.
The market dumps but only slightly to convince them enough so they can be trapped again.
Bitcoin moves sideways but never sees low 30s.
It stays trading around $40k with only the slight chance to see the upper regions of 30 (38-40k).
The market slowly starts moving again towards $50k but both sides don't trust it yet.
They call it a "scam pump" or fake-out before the real further down move to low 30s to buy back in.
Sector 3 effect ?
4?? The real bull market begins.
Bitcoin is back at $50k again but it doesn't dump?
The market is moving back up and traders are in disbelief.
They buy back in when the market is close to making new highs.
The cycle repeats itself.
While some may say "it's easy to speak in hindsight and tell us what happened in sector 1 and 2 now that it has already happened"
While I don't have a crystal ball and every thesis is a little bit of speculation I did previously express my thoughts on a post I made before the approval and it came out as expected.
There are certain patterns in the market that keep repeating itself to a certain extent.
No prediction is perfect but some things do often rhyme. You just have to understand that this is a game between you and the market makers and to win, you have to think like one of them.
Especially when it comes to trapping traders.
What was the ideal approach?
You just had to wait.
It's no secret that the market favour's investors vs traders.
Most of us have been waiting for years (bear market) so a few more weeks or months was easy.
But traders? Those are the ones the market tries to flush out.
And it almost succeeds every time.
Bob thinks he's a pro trader but Bob gets rekt every time.
Don't get rekt like Bob because neither him nor you can time the markets.
Don't get flushed out. Just HODL. Remember FOMO is a sin
