- Bitcoin (BTC) could see a price correction down to $32,000 if a spot ETF is approved, as short-term holders currently have high unrealized profit margins around 30% which have preceded corrections before.
- CryptoQuant said the price could fall to $32,000 which is the realized price for short-term holders, in line with historical “sell the news” drops after major bullish events.
- Investors are advised to be cautious and practice conservative portfolio management leading up to potential ETF approval, as “sell the news” moves have happened before like when BTC topped at $20,000 after CME futures launch.
Bitcoin (BTC) may see a price correction down to $32,000 next month if a spot ETF is approved, according to data provider CryptoQuant. The potential ETF approval is considered a “sell the news” event that could lead to a drop in price.
Unrealized Profits Near Historically High Levels
CryptoQuant noted in a report that short-term Bitcoin holders currently have high unrealized profit margins around 30%. These high margins have preceded price corrections in the past, as shown by red circles on a chart. Short-term holders are still spending Bitcoin at a profit, while rallies tend to come after short-term losses are realized.
Potential for Price to Fall to $32,000
The data provider said Bitcoin’s price could decline to $32,000, which is the realized price for short-term holders. This lines up with “sell the news” events, where prices often drop after a highly anticipated bullish catalyst occurs.
Investors Advised to Exercise Caution
Capriole Investments said investors should practice conservative portfolio management leading up to a potential ETF approval. With Bitcoin up 60% during recent ETF anticipation, the risk is now substantially higher for long positions.
History Shows “Sell the News” Pattern
In Bitcoin’s history, “sell the news” moves have happened before. In 2017, BTC topped out at $20,000 after CME listed BTC futures. In 2021, Bitcoin hit $65,000 following Coinbase’s IPO before falling in subsequent months.
While a spot ETF approval is seen as positive for Bitcoin, historical data and unrealized profits indicate a “sell the news” drop could occur in the short-term. Crypto investors are advised to be cautious if holding leveraged long positions when the event happens.