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  • Writer's pictureDavid Manion

CryptoQuant Sound Alarm: Bitcoin ETF Approval May Trigger Drop to $32,000

A recent report from CryptoQuant has sparked discussions, suggesting that the approval of a Bitcoin spot exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC) could lead to a significant market event. This possibility arises as the Bitcoin (BTC) price stabilizes above $40,000, leaving many market participants with substantial unrealized profits. The report by CryptoQuant specifically posits that this scenario could trigger a “sell the news” event, historically linked to market corrections. CryptoQuant Sound Alarm: Bitcoin ETF Approval May Trigger Drop to $32,000

Bitcoin Possible Drop To $32,000

CryptoQuant's analysis suggests that the current state of Bitcoin holders may contribute to a potential drop in BTC price upon the approval of a spot Bitcoin ETF. Specifically, short-term holders are currently seeing unrealized profit margins of around 30%. According to CryptoQuant, historically, such high-profit levels have often been followed by price drops. Furthermore, the report highlights an increase in selling activity from Bitcoin miners, which could add to the potential selling pressure on BTC. When combined with the market's anticipation of a spot Bitcoin ETF approval, this situation could lead to a volatile environment, as emphasized by CryptoQuant.

Based on CryptoQuant’s analysis, Bitcoin's value often falls back to the level where short-term investors have historically realized their prices during downturns within bullish markets. The report suggests that in a scenario where "sell the news" occurs, Bitcoin’s value might see a downturn, possibly dipping to around $32,000.

Contrasting Views And Support Levels Amid ETF Speculations

Several analysts have expressed optimism about the potential approval of a Bitcoin spot ETF. Firms like Matrixport and prominent analysts like Michael van de Poppe suggest that the approval could significantly boost Bitcoin’s price to new highs.

Matrixport anticipates that the approval of Bitcoin spot ETFs by the US SEC could drive BTC’s value to around $50,000 in early 2024. Van de Poppe shares a similar outlook, foreseeing a potential rise to the $47,000-$50,000 range.

#Bitcoin did test the lows, didn’t take the liquidity beneath the lows.Anyway, correction seems over and pre-ETF we’re likely to test $47-50K.Buy the dips.— Michaël van de Poppe (@CryptoMichNL) December 19, 2023

CryptoQuant predicts a possible drop to $32,000, while other analysts believe that the bottom for BTC will not go that low. Analyst Ali, for instance, has highlighted a strong support zone between $37,150 and $38,360.

In case of a deeper correction, #Bitcoin finds solid support between $37,150 and $38,360. This zone is backed by 1.52 million addresses holding 534,000 $BTC.Also, watch out for two resistance walls that could keep the #BTC uptrend at bay: one at $43,850 and another at $46,400.— Ali (@ali_charts) December 11, 2023

The range is supported by the activities of around 1.52 million addresses holding approximately 534,000 BTC. This strong foundation of support could help reduce the risks of a significant price drop, even if a "sell the news" event were to occur after the spot ETF approval.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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