A Potential Sell-the-News Event
There is a possibility that the approval of spot Bitcoin exchange-traded funds (ETFs) in the US could have a negative impact on the price of BTC. Market analytics platform CryptoQuant suggests that investors who have seen significant gains from Bitcoin’s recent surge may sell off their holdings after the ETF approval.
Discussions with the SEC
The applicants for spot Bitcoin ETFs have been engaged in discussions with the US Securities and Exchange Commission (SEC) regarding changes to their filings. With around 32 meetings taking place this month, it is believed that the ETFs will be approved between January 8-10. Even asset manager BlackRock has announced its intention to invest $10 million in the ETFs.
The “Buy the Rumor, Sell the News” Strategy
According to CryptoQuant analysts, there is a possibility that the approval of Bitcoin ETFs could trigger a “sell-the-news” event. This strategy involves traders opening positions based on rumors and then selling once the news is confirmed. The fear of missing out (FOMO) drives this strategy, but it can lead to a drop in asset prices due to selling pressure.
Potential Price Correction
Market participants, including miners and short-term holders, currently hold unrealized profits with margins as high as 30%. Historical data suggests that price corrections often follow such situations. CryptoQuant predicts that BTC may fall to $32,000, which is the short-term holder realized price. This prediction is supported by high funding rates in Bitcoin and Ethereum derivative markets and growing sell volume.
The Hot Take: BTC Price Impact After ETF Approval
The approval of spot Bitcoin ETFs in the US may not necessarily lead to a surge in BTC price. In fact, there is a possibility of a sell-off by investors who have seen significant gains from Bitcoin’s recent rise. This “sell-the-news” event could be triggered by market participants closing their positions after the news is confirmed. Additionally, high funding rates and growing sell volume in derivative markets suggest a potential price correction. Therefore, it is important for crypto investors to be cautious and consider the possible impact of ETF approval on BTC price movements.
Owen Patter is a distinguished crypto analyst, accomplished researcher, and skilled editor, leaving a notable imprint on the cryptocurrency landscape. As a proficient crypto analyst and researcher, Owen delves into the intricate realms of digital assets, offering insights that resonate with a diverse audience. His analytical acuity is harmoniously paired with adept editorial skills, allowing him to transform complex crypto information into easily comprehensible content.