BTC breaks through the $40,000 mark, in-depth analysis of the reasons behind it.

Bitcoin (BTC) recently broke through the $40,000 mark, attracting widespread attention in the market. However, some analysts believe that the conversion of a certain trust fund to a spot ETF may have a negative impact on BTC prices.

The market has reacted to this news, but we cannot ignore the second part of "buy the rumor, sell the news." There is a risk that the market may sell off after the news materializes, leading to a significant pullback in BTC prices.

In the coming years, the BTC cycle may repeat. It is worth noting that ETFs may have a positive impact on cryptocurrency prices in the long term. However, the conditions for a new bull market are not yet in place, and it is possible that the market will experience a short-term adjustment phase before that.

Speculators maximize their profit potential by betting on these events. A certain trust fund has attracted significant attention this year, with billions of dollars flowing into the secondary over-the-counter market. Therefore, once the ETF is approved for trading, both new and old investors eager to cash out their profits may lead to a significant drop in BTC prices.

Some ETF application deadlines are in early January 2024, which means there may be more relevant news in December this year. An analyst from a major bank expects that during the conversion of trust funds to ETFs, there could be "at least $2.7 billion in capital outflow."

It is expected that the withdrawal of trust fund investors may lead to a decline in BTC prices back to cycle lows, which aligns with BTC's historical price cycles. Therefore, the approval of the ETF may not boost BTC prices in the short term, but could instead become a "sell the news" event, similar to the situation when futures products were launched.

A certain exchange launched Bitcoin futures in December 2017, coinciding with the peak of the bull market and the beginning of a two-year bear market. Another exchange launched Bitcoin futures in September 2019, allowing for cash settlement. However, this also became a "sell the news" event, and Bitcoin subsequently entered a short-term adjustment period.

Currently, multiple institutions are applying for Bitcoin spot ETFs. Although they face regulatory pressure, the relevant departments may have to approve them.

Due to the significant discount between the trust fund and the spot price of Bitcoin (which has reached a minimum of 48%), and the increasing likelihood of regulatory approval to convert it into an ETF, traders have significantly purchased the trust fund in 2023. Currently, the discount rate of the trust fund has narrowed to 10%, with approximately $2.5 billion in funds flowing into its trading market.

It is foreseeable that once the ETF starts trading, a large portion of these funds may flow out. Many speculators see it as an annual trading opportunity, betting on the potential of the trust fund to transform into a Bitcoin ETF.

However, the main event of 2024 will be the BTC halving, which may be the last significant halving and become a turning point for BTC's price excess returns. With the launch of several spot ETFs, institutional capital inflows may become the key factor driving BTC's price to break through $100,000 in 2024.

Although the financial industry shows a strong interest in cryptocurrencies, the adoption of cryptocurrencies in real life will be determined by the market rather than regulatory bodies. The market will determine the application scenarios and advantages of cryptocurrencies, and ultimately, the end users will decide their practicality.

The financial sector will also consider the reliability of BTC as a store of value when evaluating it, as well as the potential for practical applications through the Lightning Network. In addition to BTC, the importance of other cryptocurrencies such as Ethereum and Litecoin is also recognized.

Looking ahead, the cryptocurrency market is expected to continue its positive development trend next year.