As the crypto market waits with bated breath for the potential approval of Bitcoin ETFs (exchange-traded funds) in early 2024, a contradictory situation is emerging. Despite the approval seemingly heralding a bullish phase for Bitcoin, experts are suggesting a possible downturn, forecasting a drop to around $32,000 in its price by January 2024.
The widely recognized analytics firm, CryptoQuant, notes a 90% expectation of spot Bitcoin ETF approvals by the beginning of the new year. Nonetheless, they believe this could lead to a classic “sell-the-news” scenario. The firm argues the likely ETF approval could cause market participants to cash in on high unrealized profits, triggering a price correction.
Furthermore, CryptoQuant has seen increasing sell-off activities from Bitcoin miners who are currently enjoying high unrealized profits due to a surge in Bitcoin prices. This behavior from miners is expected to contribute to the downward pressure. As such, CryptoQuant predicts a potential fall to as low as $32,000 in Bitcoin’s price, aligning with the short-term holder realized price.
ARK Invest’s CEO, Cathie Wood, acknowledges the probability of a short-term sell-off but remains positive about Bitcoin’s long-term potential. Wood suggests a modest institutional investment could immensely impact Bitcoin’s price owing to its scarcity.
Simultaneously, Nic Carter from Castle Island Ventures also foresees a dichotomy in the market’s reaction to the spot Bitcoin ETF approval. Expectedly, the ETF would attract new investment classes, creating structural flows benefiting Bitcoin despite the probable short-term sell-off.