According to CoinDesk, blockchain data analytics company CryptoQuant believes that the market may experience a “Sell The News” situation, predicting that if a Bitcoin spot ETF is approved next month, the price of Bitcoin (BTC) may pull back to $32,000.
“Sell The News” is a well-known term in the capital market, describing a phenomenon where asset prices, leverage, and sentiment often rise before a bullish event and 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 positions at unfavorable prices.
CryptoQuant points out that Bitcoin short-term holders are currently experiencing an unrealized profit rate of up to 30%, a high level of unrealized profit that has historically been a precursor to price corrections. Additionally, the company states that “short-term holders tend to sell Bitcoin while still in profit, and rebounds often occur after short-term losses are realized.”
CryptoQuant adds that the price of Bitcoin could drop to $32,000, which is the realized price for short-term holders.
Digital asset hedge fund Capriole Investments suggests “conservative portfolio management” ahead of the potential approval of a spot ETF. Since the ETF frenzy started a few months ago, the price of Bitcoin has risen over 60%, with many expecting a decision to be made around January 10th. The company wrote 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. Similarly, in 2021, Bitcoin touched $65,000 after listing on the cryptocurrency exchange Coinbase, but the price of Bitcoin declined in the months following these events.
Related report: “CryptoQuant: Bitcoin Could Reach $160,000 in This Cycle.”
