The price of Bitcoin (BTC) has been rising since late 2023 on speculation about a spot Bitcoin exchange-traded fund (ETF). However, on-chain data suggests that a price correction is imminent.
In the last 13 weeks there have been 11 positive weekly closings and only two negative ones. During this period, Bitcoin is up over 70%, from $27,000 to $47,000.
However, there has been no significant correction so far.
A Bitcoin price correction cannot be ruled out: CryptoQuant
When it comes to a spot Bitcoin ETF, several factors point to increased demand for BTC. According to a CryptoQuant report shared with BeInCrypto, some of these factors include:
- The GBTC fund discount decreased from 50% in January 2023 to 5% in 2024
- The trading volume for Bitcoin funds has increased as the price has risen.
- BTC is trading at a premium on Coinbase US as demand for spot Bitcoin increases in anticipation of ETFs
In contrast, CryptoQuant believes that a correction is due soon.
“While Bitcoin demand will certainly benefit from the approval of the ETFs, we remain aware that several on-chain indicators suggest that a price correction cannot be ruled out, primarily due to the high unrealized gains of the Bitcoin Bitcoin holders,” said CryptoQuant.
The screenshot below shows that the unrealized profits of short-term Bitcoin holders have increased.
“In the past, price corrections have been preceded by high unrealized profit margins. Should prices continue to rise following ETF approval, this would increase the risk of a correction for Bitcoin,” explained CryptoQuant.
Read more: How to Prepare for a Bitcoin ETF: A Step-by-Step Approach
Behavior of short-term Bitcoin holders. Source: CryptoQuant
There is also potential selling pressure from miners depositing their Bitcoins on centralized exchanges. On Monday, BeInCrypto reported that mining pool F2Pool sent 1,000 BTC to Binance.
CryptoQuant claims that this is F2Pool’s largest daily outflow since August 2023.
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