Bitcoin Prices Could Drop If SEC Approved ETFs, Here's Why!

Bitcoin, the world's largest crypto asset by market cap, is predicted to drop when regulators approve of Bitcoin ETF. (Photo; Doc. Pexels)

JAKARTA - The price of Bitcoin, which is currently in the range of $42,539 per coin, could experience a drastic drop if the exchange-traded fund (ETF) Bitcoin was approved by the United States Securities and Exchange Commission (SEC). This was stated by blockchain analytic firm CryptoQuant.

In its latest report released on Thursday, December 28, CryptoQuant assessed that Bitcoin's ETF approval could be a "sell the news" event that sparked a sell-off in the market. The reason is that many investors have recorded a huge advantage over the previous Bitcoin price increase and may want to make it happen if Bitcoin ETF is officially launched.

Furthermore, CryptoQuant estimates that the price of Bitcoin could drop to around $32,000 per coin if Bitcoin ETF is approved. The report is based on an on-chain data analysis that calculates transactions that run on the network and off-chain that show an increase in selling activity in several major crypto exchanges.

"We argue that it is likely that ETF approval will become a'sell the news' event because Bitcoin market participants currently have high profits that are not realized," wrote CryptoQuant.

Bitcoin ETF is an investment product that allows investors to get exposure to Bitcoin without having to buy or store it directly. Bitcoin ETF will track the price of Bitcoin by using a future contract or company shares linked to Bitcoin.

The SEC is currently considering the approval of the Bitcoin ETF submitted by big players in the investment management sector. Optimism regarding the possible approval of the Bitcoin ETF is increasing after several big Wall Street players, including BlackRock, Fidelity, and VanEck, submitted their own Bitcoin ETF applications this year.

At the same time, Bloomberg Intelligence analyst James Seyffart estimates that the possible approval of Bitcoin ETF until January 10, 2024, will reach 90%. If this happens, CryptoQuant estimates that there will be a massive capital flow to the crypto market, with the potential for crypto market capitalization reaching $900 billion. Currently, crypto market capitalization is around $832 billion, up from about $550 billion at the time the October CryptoQuant report was published.