According to a recent report by CryptoQuant, the potential approval of a spot Bitcoin BTC +0.48% ETF could become a “sell the news” event.
To support this assertion, CryptoQuant analysts pointed to data that showed bitcoin market participants are currently sitting on high unrealized profits after the digital asset’s rally above the $40,000 mark. “Short-term bitcoin holders are experiencing high unrealized profit margins of 30%, which historically has preceded price corrections,” the report said.
CryptoQuant analysts added that bitcoin miners are also experiencing high unrealized profits, which could also contribute to BTC sell pressure. “We are seeing increasing miner selling in the last few weeks as prices remain above $40,000,” the report added.
According to the analysts, during corrections in bull markets, the price of bitcoin tends to retrace to the short-term-holder realized price. Considering this, the report added that — in a “sell the news” scenario — the bitcoin price could decline, potentially reaching as low as $32,000.
Potential for a spot bitcoin ETF approval
Bloomberg Intelligence analysts are assigning 90% odds of a spot bitcoin ETF approval by the U.S. Securities Exchange Commission in the first quarter of 2024.
Year-to-date gains for bitcoin are currently above 155%, with the digital asset’s rise being mostly fueled by optimism that the SEC is getting ready to approve one or more of the spot bitcoin ETF applications that have been filed with the regulatory body. More than a dozen firms — including BlackRock, WisdomTree, and Valkyrie — are waiting for the green light from the SEC.
The world’s largest digital asset by market capitalization is now changing hands for $43,119 at 6:50 a.m. ET, according to The Block’s Prices Page.
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