Why is Bitcoin Dropping After the Spot ETF Approval? Analyst Questions Whether BTC Is Going to $32,000
The recent approval of a Bitcoin spot ETF by the SEC was initially met with enthusiasm, with Bitcoin rising briefly to over $48,000. However, Bitcoin has since fallen dramatically to under $41,000 at the time of this writing. Cryptocurrency analyst Wise Advice sees several interrelated factors at play to explain this counterintuitive reaction:
What you'll learn 👉
Selling the News
According to Wise Advice, a common occurrence in financial markets is what’s known as “buy the rumor, sell the news.” In anticipation of the SEC approving a Bitcoin spot ETF, major institutional investors and whales had been accumulating Bitcoin over the prior 6-7 months.
However, once the actual approval occurred, a classic “sell the news” reaction kicked in, as these big players took the opportunity to take profits.
Grayscale Liquidations
At the same time, Wise Advice points out that Grayscale Bitcoin Trust (GBTC) has likely been dumping Bitcoin holdings. GBTC shares previously traded at premiums as high as 40% compared to the value of the underlying Bitcoin.
However, this premium has evaporated. With GBTC no longer trading at a premium, shareholders have an incentive to sell at a profit versus continuing to pay Grayscale’s high management fees.
Doge2014 raises 500K in days celebrating Dogecoin. Make potentially big profits and get in on exclusive airdrop!
Show more +Miner Distributions
Adding further selling pressure, according to Wise Advice, bitcoin miners have also been distributing coins at a rapid clip. Miner reserves recently dropped over 10,000 BTC in a single day, falling to yearly lows.
With miners paying bills and financiers seeking return on capital, miner distributions can amplify bearish market moves.
In summary, Wise Advice believes that while the Bitcoin ETF approval removes a regulatory hurdle for broader institutional adoption, short-term profit-taking incentives for major holders initially outweighed this long-term bullish development.
However, it remains uncertain whether BTC can hit $32,000 amidst the market slump. With several analysts laying out different projections, the possibility of a downward trend can’t be neglected.
You may also be interested in:
- These Are the Two Possibilities for BTC Price With the Current Bitcoin Cycle
- Why Ripple’s Recovery Will Be Faster Than Anticipated, XRP Expected to Rise to This Price Level
- Why investors from Polygon (MATIC) and Tron (TRX) are buying into the new Pushd (PUSHD) presale
We recommend eToro
Wide range of assets: cryptocurrencies alongside other investment products such as stocks and ETFs.
Copy trading: allows users to copy the trades of leading traders, for free.
User-friendly: eToro’s web-based platform and mobile app are user-friendly and easy to navigate.
