On-chain analytics platform CryptoQuant believes that a deep corrective move is brewing for Bitcoin as the market eagerly anticipates the possible approval of spot-based BTC exchange-traded funds (ETFs).
In a research report, CryptoQuant says that the approval of Bitcoin ETFs sometime this month could be a sell-the-news event as BTC investors are now sitting on significant gains.
According to the on-chain data provider, traders might capitalize on the event to lock in their profits, which could lead to a Bitcoin correction.
“Market analysts are assigning 90% odds of Bitcoin spot ETF approval in the USA by January 8th to 10th, 2024. We argue that the ETF approval could be a ‘sell-the-news’ event as Bitcoin market participants are sitting on high unrealized profits.”
Should Bitcoin witness a correction following the U.S. Securities and Exchange Commission’s (SEC) approval of BTC ETFs, CryptoQuant predicts that Bitcoin could drop almost 30% from current prices based on one metric.
“In the scenario, the Bitcoin price may decline to as low as $32,000, the short-term holder (STH) realized price.”
The STH realized price is an on-chain metric that tracks the average price of acquisition of all the Bitcoin that have not moved for less than 155 days. A pullback toward the STH realized price at around $32,000 would wipe out most of the gains made by investors who bought BTC in the last five months or so.
At time of writing, Bitcoin is trading for $44,990, up over 5% in the last 24 hours.
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