Just a couple of weeks from now, the U.S. could have its first spot bitcoin ETF. The excitement around the prospect has been building for months, but the market may be a little overheated now. The chances that the ETF approval will be a sell-the-news event have been getting higher, according to CryptoQuant, which points to the fact that investors have been sitting on high unrealized profits – a trend that historically has preceded price corrections. In this case, bitcoin could correct all the way down to $32,000, the short-term holder realized price, the crypto data provider said. “A lot of unrealized profits have been building up because of the price rally in anticipation of the ETF approval, and now those unrealized profits are at extremely high levels for short-term holders and also for miners,” said Julio Moreno, CryptoQuant’s head of research. “Because there is so much unrealized profit we argue that, once the news of ETF approval is confirmed, market participants would want to realize those profits by selling bitcoin.” Meanwhile, with the recent surge in bitcoin price and transaction fees, miners have entered “extremely overpaid” territory, according to CryptoQuant, and have been selling lately with the price remaining above $40,000. The ETF has been the story of the second half of the year in crypto. Bitcoin has gained 57% over the past three months, as the Securities and Exchange Commission’s engagement with potential ETF issuers appeared to increase and optimism started to intensify. The coin is up 11% for December. Approval would allow the first ever spot bitcoin ETFs to launch in the U.S. It’s regarded by many as a key catalyst for bitcoin and crypto broadly in the new year, the bull case being that it would bring a flood of new investors into the market. (Of course, it’s also possible the SEC issues rejections, but broad consensus is that that’s unlikely.) Mark Connors, head of research at investment fund manager 3iQ — which launched a spot…
2023-12-28 14:31:00
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