Bitcoin ETF Approval: Report Shows Risks of a ‘Sell-the-News’ Scenario

Published: Dec 28, 2023
Written By:
Vignesh Karunanidhi
Milk Road Writer

Bitcoin prices could face downside pressure if the U.S. Securities Exchange Commission (SEC) approves a spot Bitcoin exchange-traded fund (ETF), according to a new report by on-chain data firm CryptoQuant.

In the report, CryptoQuant analysts warned that the long-awaited spot bitcoin ETF approval could end up becoming a “sell the news” event, with Bitcoin prices retracing as investors take profits.

Key Takeaways:

  • Short-term Bitcoin holders are currently sitting on high, unrealized profits after Bitcoin’s rally above $40,000.
  • Bitcoin miners are also carrying high unrealized profits from mining, which could translate into selling pressure as they liquidate Bitcoin rewards.
  • Miner selling has increased noticeably in recent weeks, despite prices holding above $40,000.

Read more: Worldcoin Expands To Singapore Following Halt In India

During past corrections in bull markets, Bitcoin prices have tended to fall back to the “short-term holder realized price”—the price level where short-term speculators breached even. This suggests the potential for a retracement to $32,000, according to the report.

Bitcoin ETF approval has fueled the BTC price

The pending approval of a spot Bitcoin ETF has fueled massive optimism for 2023, with Bitcoin gaining over 157% year-to-date. This enthusiasm could turn into selling pressure on the actual news, according to the report.

Separately, analysts assigned a 90% probability that the SEC will approve a spot bitcoin ETF in the first quarter of 2024. Over a dozen asset managers, including BlackRock and Valkyrie, have spot bitcoin ETF proposals pending before the SEC.

Read more: MicroStrategy Buys 14,620 Bitcoin (BTC) For $615,700,000

The prospect of an SEC-approved ETF has been a major catalyst for Bitcoin’s stellar returns this year. However, the CryptoQuant report raises the possibility that the news itself results in a “sell the news” decline as traders lock in profits. For now, Bitcoin is trading at around $42,900 at press time.

Vignesh Karunanidhi

Vignesh has been a seasoned professional in the crypto space since 2017. He has been writing for over 6 years and specializes in writing and editing various types of crypto content, including news articles, long-form pieces, and blog posts, all focused on sharing the beauty of blockchain and crypto.

Vignesh Karunanidhi
Milk Road Writer
Vignesh has been a seasoned professional in the crypto space since 2017. He has been writing for over 6 years and specializes in writing and editing various types of crypto content, including news articles, long-form pieces, and blog posts, all focused on sharing the beauty of blockchain and crypto.