The launch of a highly anticipated spot Bitcoin exchange-traded fund (ETF) next year could lead to the price of the cryptocurrency to drop, a new report suggests.
Blockchain data firm CryptoQuant said in a report Thursday that the approval of the investment vehicle could be a “sell the news” event as investors are currently sitting on big gains in the run up to the potential launch.
The Singapore-based company added that this may see the price of Bitcoin plunge to as low as $32,000 per coin. It’s currently priced at $42,539, according to data from CoinGecko.
“In this context, we argue there are increasing odds that the ETF approval will be a ‘sell the news’ event as Bitcoin market participants are sitting on high unrealized profits,” the report read.
It is expected that the U.S. Securities and Exchange Commission will approve a Bitcoin ETF soon. Bloomberg Intelligence analysts have put the odds of a green light by January 10, 2024 at 90%.
A spot Bitcoin ETF is an investment fund that allows people to get exposure to the digital coin by buying shares that track the price of Bitcoin. It would be good for traditional investors, experts say, who don’t want to deal with buying or storing cryptocurrency.
The SEC has been slow to approve such a vehicle because of concerns over market manipulation. But major Wall Street players—including the world’s biggest asset manager BlackRock—this year applied to the top regulator to release their own product.
CryptoQuant also said in an October report that the approval of a spot Bitcoin ETF could lead to a huge amount of fresh capital into the space, with the market cap of the cryptocurrency potentially surging to $900 billion. It currently sits at $832 billion, up substantially from when the report came out—about $550 billion at the time.
Edited by Andrew Hayward
