A recent report from CryptoQuant has sparked discussions and suggests that the approval of a Bitcoin spot exchange traded fund (ETF) by the US Securities and Exchange Commission (SEC) could lead to a significant market event.
This possibility arises if the Bitcoin (BTC) price stabilizes above $40,000 and many market participants are left with significant unrealized profits.
Notably, CryptoQuant's report suggests that this scenario could trigger a “sell the news” event, which has been associated with market corrections in the past.
Bitcoin could fall to $32,000
CryptoQuant's analysis suggests that the current state of Bitcoin holders is one reason for the possible decline in BTC price if a spot Bitcoin ETF is approved.
Short-term companies in particular have unrealized profit margins of around 30%. According to CryptoQuant, such high profit levels often preceded price declines.
Additionally, the report notes an increase in selling activity from Bitcoin miners, increasing potential selling pressure on BTC. This, coupled with the market's expectation that the Bitcoin ETF will be approved locally, could create a volatile environment, as CryptoQuant points out.
Analyzing Bitcoin Miner Profitability: An Annual Review. | Source: CryptoQuant
Based on CryptoQuant's analysis, during downturns in bullish markets, Bitcoin's value often falls back to the levels where short-term investors have historically realized their prices.
With this in mind, the report suggests that in a scenario where “the news sells” occurs, Bitcoin’s value could see a decline, with a possible drop to around “$32,000.”
Contrasting views and support levels amid ETF speculation
The discussion about the possible approval of a Bitcoin spot ETF is not one-sided. Several analysts are predicting a positive outcome, with firms like Matrixport and prominent analysts like Michael van de Poppe suggesting the approval could catapult the price of Bitcoin to new highs.
Matrixport believes that the approval of Bitcoin spot ETFs by the US Securities and Exchange Commission (SEC) could increase the value of BTC to around $50,000 in early 2024. Van de Poppe agrees with this assessment and predicts a possible increase to the range of $47,000 to $50,000.
See more
#Bitcoin has tested the lows, failed to bring liquidity below the lows.
Anyway, the correction seems to be over and we are likely to test $47,000-$50,000 before the ETF.
Buy the dips. pic.twitter.com/Ar4mqvYRjJ
– Michaël van de Poppe (@CryptoMichNL) December 19, 2023
In addition, while CryptoQuant predicts a possible drop to $32,000, other analysts' forecast for the BTC bottom is not that low. For example, analyst Ali highlighted a robust support zone between $37,150 and $38,360.
See more
In case of a deeper correction, #Bitcoin will find solid support between $37,150 and $38,360. This zone is supported by 1.52 million addresses holding $534,000 BTC.
Also, watch out for two resistance walls that could halt the #BTC uptrend: one at $43,850 and another at $46,400. pic.twitter.com/NGm1XpMOLf
— Ali (@ali_charts) December 11, 2023
This range is reinforced by the activity of approximately 1.52 million addresses holding approximately 534,000 BTC. Notably, such a strong support foundation could mitigate the risks of a drastic price decline even if a “sell the news” event occurs following spot ETF approval.
Bitcoin (BTC) price is moving sideways on the 4-hour chart. Source: BTC/USDT on TradingView.com
Featured image from Unsplash, chart from TradingView
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.