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Bitcoin’s forays into traditional finance have been marked by massive sell-offs
- Bitcoin’s price tends to drop shortly after crypto’s forays into traditional finance.
- The launch of bitcoin futures, options, and ETFs have all marked short-term highs in the price of bitcoin.
- Since the launch of spot ETFs last week, bitcoin is down about 9%.
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OUR Map of the day is of Louis Sykes of All Star Charts, and this shows that the price of bitcoin tends to drop shortly after traditional finance jumps into cryptocurrency.
For example, the CME’s launch of bitcoin futures on December 18, 2017 represented a temporary high for the cryptocurrency, followed by a dramatic 81% price drop over the next year.
And when the CME launched bitcoin options contracts on January 13, 2020, the cryptocurrency soon after experienced a rapid and painful decline of about 53% over the next two months.
Other Traditional Financial Events for Bitcoin include Coinbase’s IPO, a cryptocurrency custodian on April 14, 2021. After Coinbase’s IPO, the price of bitcoin fell 55% over the next two months before recovering over five months to its all-time high of around $69,000.
Finally, the ProShares to Launch Bitcoin Futures ETF on October 19, 2021nearly marked the peak of bitcoin’s price. The cryptocurrency was trading at around $64,000 that day, and peaked at $69,000 just three weeks later. After reaching its peak, bitcoin went through a brutal year-long bear market and fell as much as 78%.
With the launch of 11 Bitcoin spot ETFs last week, The question is whether bitcoin will follow its historical pattern and sell off again.
“Bitcoin tends to slow down after a major traditional financial launch. Will the recent Bitcoin spot ETF be the same?” Sykes asked on social media.
So far, things aren’t looking great for bitcoin investors. The cryptocurrency has fallen about 9% since bitcoin spot ETFs began trading last Thursday.