A recent from CryptoQuant has sparked discussions, suggesting that a Bitcoin spot exchange-traded fund (ETF) approval by the US Securities and Exchange Commission (SEC) could lead to a significant market event.

This possibility arises amid the Bitcoin (BTC) price stabilizing above $40,000, leaving many market participants sitting on substantial unrealized profits.

The report by CryptoQuant particularly posits that this scenario could trigger a “sell the news” event, historically linked to market corrections.

Bitcoin Possible Drop To $32,000

CryptoQuant’s analysis points to the current state of Bitcoin holders as a reason for the possible drop in BTC price when the approval of spot Bitcoin ETF happens. Particularly the short-term ones, experiencing unrealized profit margins of around 30%. According to CryptoQuant, such high-profit levels have often preceded price drops. Additionally, the report notes an uptick in selling activity from Bitcoin miners, adding to the potential sell pressure on BTC. This, combined with the market’s anticipation of a spot Bitcoin ETF approval, could create a volatile environment, as highlighted by CryptoQuant.

Based on CryptoQuant’s analysis, during downturns within bullish markets, Bitcoin’s value often falls back to the level where short-term investors have historically realized their prices. Considering this, the report suggests that in a scenario where “sell the news” occurs, Bitcoin’s value might see a downturn, with a possible dip to around “$32,000.”

Contrasting Views And Support Levels Amid ETF Speculations

The conversation around a Bitcoin spot ETF’s potential approval is not one-sided. Several analysts predict a positive outcome, with firms like Matrixport and prominent analysts like Michael van de Poppe suggesting that the approval could catapult 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 echoes this sentiment, foreseeing a potential rise to the $47,000-$50,000 range.

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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)

Additionally, while CryptoQuant predicts a possible drop to $32,000, other analysts’ prediction of BTC bottom doesn’t go that low. Analyst Ali, for instance, has highlighted a robust support zone between $37,150 and $38,360.

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

This range is reinforced by the activities of approximately 1.52 million addresses holding about 534,000 BTC. Notably, such a strong foundation of support might mitigate the risks of a drastic price fall even if a “sell the news” event were to occur following the spot ETF approval.

Featured image from Unsplash, Chart from TradingView