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With institutional adoption comes institutional trading strategies, here's how I'm looking at current #Bitcoin price action.
If you've studied any technical analysis, you'd know that this chart screams institutional accumulation. If this is new to you, here's a very basic breakdown of how this is likely playing out:
Several institutions have clearly given the order to their trading desk (algos) to accumulate a defined amount of BTC at a given ceiling price. This has been underway to some extent throughout 2023, but with ETF-related news being a bat-signal for retail buying, current PA is seemingly a last ditch effort from many funds to round out a position between $35,000-35,500.
Step 1. Build a base position as quietly as you can (block trades and low volume open market buying)
Step 2. As bid strength from retail and other institutions pushes price into target sell zone, open market sell a % of your position to trigger external selling (aka a shakeout)
Step 3. Buy cheaper sats from profit takers, short sellers and nervous retail
Step 4. Rinse & Repeat
This process continues until the target position size has been accumulated. You then know, as one of the main sources of sell pressure on the asset, price will likely follow through your resistance level if the tape is strong enough and you have secured your targeted cost basis for the seed.
The goal is to accumulate a large position without pushing price too high.
So which institution(s) are creating this price channel?
One obvious answer would be funds looking for directional exposure to an asset primed for strong performance post-Halving and post-FFR cuts. Next, there are clearly a lot of retail buyers here, categorized by relentless spot bidding.
Finally, with ETF rulings pending, it's likely that all of these filers are looking to seed their fund and begin accumulating the asset prior to the ruling. They know that approval will likely attract too much buy pressure to maintain control over price without dumping a significant portion of a position they NEED to own.
In a Spot-ETF, you begin with an initial position and issue shares relative to the size of your position. So, if you were Blackrock, Ark, Fidelity, etc. and knew there's a very high chance you'll need to be holding 1000's of BTC within the next few quarters, would you wait for a ruling to start buying?
Obviously not. If confident in the approval, you would build your position prior, but you can't just go on Coinbase and open market buy 10,000 BTC. That would cause price to skyrocket, ending the window to secure BTC at your target price. So instead, you're going to have an algo manipulate price to secure a target cost basis, same as what occurs in the equity market.
To me, looking at BTC price action says a few things:
1. Institutions strongly believe that ETF approvals are coming
2. Retail investors are piling into BTC
3. Price will likely explode higher after institutions have accumulated their target position size, or ETFs are approved, whichever comes first
Price is coiling sideways, meaning that bid and ask strength is nearing equilibrium. At this rate, the next leg of #Bitcoin price action will likely begin in November. Which direction do you think it will go?
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