Bitcoin ETF approval could be “selling on the news”: CryptoQuant | CoinDesk JAPAN

Bitcoin (BTC) will fall to $32,000 next month (January 2024) following the anticipated approval of a physical ETF, data provider CryptoQuant predicts.

Regarding the ETF approval, which is said to be a “sell on the news” event, CryptoQuant told CoinDesk that traders’ unrealized gains are currently at levels that historically precede corrections.

“Sell the news” is a well-known term in capital markets that describes the rise in asset prices, leverage, sentiment, etc. in the lead-up to a bullish event, followed by a fall in prices immediately following the actual event. ing.

The U.S. Securities and Exchange Commission (SEC) approved a Bitcoin spot ETF in January, and the ETF approval is seen as a bullish event as institutional investors begin to inflow into Bitcoin and are expected to generate consistent buying pressure. ing.

“Short-term Bitcoin holders are experiencing high unrealized gains of 30%, which historically precedes price corrections (red circles in the graph),” CryptoQuant writes.

CryptoQuant added that Bitcoin could fall to $32,000, the realized price (purchase price) for short-term holders.

Similarly, Capriole Investments said “conservative portfolio management” makes sense until a physical ETF is likely approved.

“Bitcoin has risen more than 60% since the ETF hype started a few months ago, and X (formerly Twitter) has been filled with expectations for approval around January 10th, leading to extremely high volatility around this time. We need to start anticipating events (up and down price movements). The risk is much higher for long positions in Bitcoin now than it was just a few weeks ago.” (Capriol’s blog)

“Selling on the news” events have been common in Bitcoin history, with prices peaking at $20,000 in 2017 after the Chicago Mercantile Exchange (CME) listed Bitcoin futures. It peaked again in 2021 after Coinbase completed its IPO (initial public offering), hitting $65,000, before falling in the following months.

Bitcoin is trading at $42,450 at the time of writing this article. At the beginning of the year, it was $16,000. According to CoinMarketCap, daily trading volume has remained stable at around $80 billion.

｜Translation/Editing: CoinDesk JAPAN Editorial Department
｜Image: CryptoQuant
｜Original text: Bitcoin ETF Approval Tipped to Be ‘Sell The News’ Event: CryptoQuant