Bitcoin’s ‘Panic Room Problem’

TL;DR

• It goes like this: BTC ETF traders get spooked by price dips over the weekend → they sell off first thing Mon. → prices continue to tumble throughout the week.

Full Story

There’s a new problem being faced by Bitcoin, and it’s a symptom of the ETFs.

(It’s the same reason why we’d never buy-in to them ourselves).

Don’t get us wrong, we’re glad the Bitcoin ETFs exist!

But because we’re individual investors, we’re free to buy and custody our own Bitcoin, without running into any regulatory/operational red tape.

(Which is essentially the problem the ETFs are solving for big-dog investors).

And by holding custody over our own Bitcoin, it means we can avoid the “panic room problem.”

If you’ve never heard of it, that’s because we just made it up.

But it’s meant to reflect a new pattern we’re seeing in the crypto markets, driven by the BTC ETFs.

It works like this:

Because ETF shares are traded on US stock exchanges — it means traders can’t cash out over the weekend. Meanwhile, the Bitcoin market runs 24/7.

So if market instability strikes outside of stock trading hours (e.g. the weekend), you just have to sit there and watch prices tumble until Monday.

(Kind of like being locked up in a panic room, while you watch your home get ransacked).

And this new paradigm can have a knock-on effect throughout the week:

Traders get spooked by price volatility over the weekend → they sell off first thing Monday → this causes more further price depression through the week.

Good news is:

The same goes for the inverse — when prices go up over the weekend, it can spur upward price movement throughout the week.

Either way: we like our optionality — so self custody it is.