Cathie Wood expects ‘sell the news’ effect to Bitcoin ETF approval
Wood's insights come amid ARK Invest's ongoing efforts, along with 13 other applicants, to secure a spot Bitcoin ETF approval from the SEC.
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ARK Invest CEO Cathie Wood predicts a short-term decline in Bitcoin’s price following the potential approval of a spot Bitcoin ETF, attributing this to a possible ‘sell the news’ investor reaction.
In an interview with Yahoo Finance, Wood explained that despite this projection of short-term volatility, she remains optimistic about the ETF’s long-term benefits for institutional investment and Bitcoin’s value.
“Those who have been moving in and enjoying some nice profits, will probably sell on the news,” Wood said, adding that this was “an expression that traders use, so you anticipate the event, beat up the price and then sell on the news.”
The term “sell the news” refers to a market phenomenon where investors sell their stocks or assets after a major anticipated announcement, such as a product launch or, in this case, the approval of a financial product like a spot Bitcoin ETF. This behavior is often driven by the expectation that news has already been factored into the asset’s price.
Wood’s insights come amid ARK Invest’s ongoing efforts, along with 13 other applicants, to secure a spot Bitcoin ETF approval from the US Securities and Exchange Commission (SEC).
Recent discussions suggest a positive outlook for this development, with analysts suggesting that the date for approval is likely to come on or before January 10, 2024.
“After being denied several times by the SEC, without hearing from anyone at the SEC, we and others we know have gotten questions from the SEC, very thoughtful, detailed, technical questions. That’s a very positive move,” Wood notes.
The ARK Invest exec said that institutions “have been reticent” prior to the prospect of a spot Bitcoin ETF approval from the SEC. Asked about the impact of a spot Bitcoin ETF approval on how financial institutions engage and interact with crypto, Wood said that such an event would “move the price significantly,” based on her perspective of Bitcoin’s current scarcity.