According to a report by CoinDesk, blockchain data analytics company CryptoQuant believes that the market may experience a “Sell The News” situation, with the prediction that if a Bitcoin spot ETF is approved next month, the price of Bitcoin (BTC) could pull back to $32,000.
“Sell The News” is a well-known term in the capital markets that describes a phenomenon where asset prices, leverage, and sentiment often rise prior to a bullish event, and then quickly decline shortly after the event actually occurs. This is because savvy traders take advantage of overcrowded long positions, trapping leveraged investors and forcing them to close or liquidate their positions at unfavorable prices.
CryptoQuant points out that Bitcoin short-term holders are currently experiencing unrealized profit rates of up to 30%, which historically has been a precursor to price corrections in the market. Additionally, the company states that “short-term holders tend to sell Bitcoin when they are still in profit, and rebounds usually occur after short-term losses are realized.”
CryptoQuant further adds that the Bitcoin price could drop to $32,000, which is the realized price for short-term holders.
Digital asset hedge fund Capriole Investments suggests that “conservative portfolio management” is wise on the eve of a potential spot ETF approval. Since the ETF frenzy began several months ago, the price of Bitcoin has risen over 60%, and many anticipate a decision on approval to be made around January 10th. The company writes in a blog post:
The Sell The News phenomenon is common in Bitcoin’s history. In 2017, the price of Bitcoin reached nearly $20,000 after the listing of BTC futures on CME, and similarly, in 2021, Bitcoin touched $65,000 after its listing on the cryptocurrency exchange Coinbase, but in the months following these events, the price of Bitcoin experienced a decline.
Related report: “CryptoQuant: Bitcoin Could Reach $160,000 in This Cycle”
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