Fidelity Sees Recent BTC Sales as Short-Term ‘Hangover’ Post-Spot Bitcoin ETF Launch

Jurrien Timmer, Fidelity’s Director of Global Macro, has expressed the view that the current trends in Bitcoin’s price suggest a short-term positioning adjustment rather than a long-term trend reversal in a thread on X.

According to Timmer, the current BTC sales are perceived as a short-term phenomenon, characterized as a “hangover” following the launch of spot Bitcoin Exchange-Traded Funds.

Bitcoin Price Consolidation Amid ETF Hangover

Bitcoin has experienced a 6% decrease in the last week, a move attributed to the market impact of the recently approved spot Bitcoin ETFs.

While some anticipated a drop in Bitcoin’s price to find support around the $32K to $38K range, Fidelity’s Jurrien Timmer doesn’t foresee the sell-off continuing much longer.

Well, the moment finally came last week, which is very exciting to say the least. Will this be a new chapter towards Bitcoin’s widespread adoption as a commodity-currency? 🧵

— Jurrien Timmer (@TimmerFidelity) January 16, 2024

Timmer believes the current situation is more of a “sell-the-news moment” and expects a consolidation of recent gains. He notes that participants may have “equitized” future spot positions through futures markets or Bitcoin-sensitive equities.

He added that open interest (OI) has surged in recent weeks, and the Goldman Sachs Bitcoin-sensitive equities index experienced fluctuations from 58 to 139 before settling at 95.4. Timmer anticipates a potential decrease in open interest in the coming weeks as asset managers convert their proxy exposure from futures to spot.

Timmer regarded Bitcoin’s current price as reasonable, considering factors such as the growth of its network and prevailing interest rates in the economy.

He expressed optimism about Bitcoin’s longer-term prospects, suggesting that this could mark a new chapter in its widespread adoption as a commodity currency, although acknowledging that it might take some time to materialize.

Bitcoin Price Declines Contrary to Anticipated Rally

Spot Bitcoin ETFs have reportedly drawn in just under $1 billion in the first three days of trading, signaling investors’ cautious but positive response to these new stock market vehicles tracking the cryptocurrency.

Funds from BlackRock, Franklin Templeton, and Invesco, among others, collectively attracted inflows of $984 million since their launch on Thursday, as reported by CoinShares, a digital asset manager. BlackRock, the world’s largest asset manager, led the way with $508 million inflows, followed by Fidelity with $442 million.

The approval of these funds by the U.S. Securities and Exchange Commission (SEC) was celebrated by crypto enthusiasts, marking a significant development after more than a decade of rejections. Supporters anticipate that the availability of spot Bitcoin ETFs will draw new investors to the token, potentially contributing to its long-term price growth.