Bitcoin (BTC) experienced a notable setback, dropping nearly 5% within the last 24 hours and reaching its lowest level in two months, slipping below $39,000. This reversal erases much of the gains made in the preceding two months, primarily driven by heightened expectations surrounding the approval of spot exchange-traded funds (ETFs) in the U.S.
The CoinDesk 20, an index comprising the most prominent tokens by market capitalization, mirrored the downturn, falling by 7%.
The cryptocurrency briefly touched $38,700 before a modest recovery. The recent surge had propelled Bitcoin to a two-year high of over $49,000, coinciding with the initiation of spot bitcoin ETF trading in the U.S. on January 11.
Analysts point to the influence of sales from the FTX bankruptcy estate, which has reportedly offloaded around 22 million shares of Grayscale’s GBTC in the past few weeks, contributing to the selling pressure on Bitcoin. Notably, on-chain analysis firm CryptoQuant had anticipated that the ETF approval might trigger a “sell-the-news” event.
The term “sell the news” describes a phenomenon in capital markets where prices surge in anticipation of a positive event, only to decline shortly after the event occurs.
The approval of spot bitcoin ETFs in the U.S. was widely expected and factored into market prices, leading analysts at Japan-based crypto exchange bitBank to believe that the event is likely to mark a short- to mid-term peak for Bitcoin’s price.
Earlier predictions by 10X Research analysts foresaw a potential drop in Bitcoin’s value to at least $38,000 in the near term, citing technical analysis. CryptoQuant’s more bearish target places Bitcoin at $32,000, emphasizing the lingering impact of the “sell-the-news” sentiment following the ETF debut.
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