In Wednesday’s newsletter, we tried to map out what the ETF launch might look like.

The one thing we knew for sure was that there would be volatility.

And we got it.

From the bottom of the wick to the top, $ETH moved 12% within a single day. Then it closed back around where it had opened the day before.

$ETH 1 Hour Chart

We can also look at the sequence of events on the 1-hour chart.

Sometimes, reviewing the tape can help us be smarter for next time.

Here’s what happened:

1. Credible ETF rumor — when the news dropped that ETF filings were being updated on Monday, this is where the biggest pump happened. If you got in within the first hour of the announcement, you’d still be in-the money right now.

2. Fake dump — When the market closed yesterday with no announcement about the ETF, price got pushed way down. Most likely, people were overleveraged long, and so the market makers took out their stops before the announcement to get more cheap coin.

3. ETF approved — There’s a big spike in volume, but not much movement in price. Market makers were ready to sell the coins they bought on the fake dump, so there was more than enough supply for the announcement.

4. Sell-off — Anyone who bought $ETH right at the announcement were paying a premium for that confirmation, and price has been trailing down as volume and excitement trailed off.

Takeaways

You can draw your own conclusions from that sequence of events, but here are some of my observations:

1. Get in the trade early.
   Most of the value from the ETF rumor accrued to people already in long positions when the rumor happened.

2. Expect volatility.
   On days with expected news, there’s typically a lot of volatility, unrelated to the outcome. Stops might get run on new positions.

3. Pay a premium for confirmation.
   When buying on days with expected good news, we might pay a short-term premium for that confirmation. Price will often sell off after the expected good news.

4. If outcome is as expected, price won’t change.
   If the outcome is what the market expects, then there might not be much movement on the price overall.

What’s next for $ETH

Right now, $ETH is consolidating sideways, as the trending dots on the Sharp Shooter Indicator are catching up.

There are three levels to watch here:

1. $3.7K — this is the previous pivot point that $ETH has been closing above so far.

2. $3.5K — We have a lot of daily candle closes and opens down here. This is almost where the wick reached on the fake dump.

3. $3.2K — If we got a deeper pullback, this is where I’d expect the next support would be.

Most likely $ETH stays above $3.5K, but as you know, the market likes to test confidence with scary dumps before the next move up.

I’d expect that as the ETFs open up (or even in anticipation), and inflows start coming, that $ETH will start trading higher.

Lots of reasons to stay bullish on the high timeframe as we head into the holiday weekend.

Happy Memorial Day to those who celebrate!

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Disclaimer

The contents of this newsletter are expressed in my opinion only, none of which is financial advice. Always do your own research as this information is intended for educational & entertainment purposes only.