Bitcoin Under $39K As ETF Debut Continues To Be a ‘Sell-the-News’ Event
Bitcoin’s price has dipped below $39,000, marking a nearly 5% decrease in the past 24 hours and reaching its lowest level in two months. This downturn coincides with the recent debut of spot exchange-traded funds (ETFs) in the U.S., which, contrary to some expectations, has not sustained the bullish momentum for the leading cryptocurrency.
What is a “Sell the News” Event
A “sell-the-news” event refers to a phenomenon in capital markets where asset prices, leverage, and sentiment run up in the lead-up to a bullish event, only for prices to tumble shortly after. This is because astute traders capitalize on the over-crowded long trade, trapping those with leverage and forcing them to close or get liquidated as the price goes against them.
Bitcoin Price and Market Sentiment
The price of Bitcoin (BTC) slumped under $39,000 during Tuesday’s European trading hours, reversing the gains it had made in the past two months in anticipation of the U.S. spot ETF approvals. The CoinDesk 20, a liquid index of the highest tokens by market capitalization, also fell by 7%. The cryptocurrency had recently hit a two-year high of over $49,000 as spot bitcoin ETFs began trading in the U.S. on January 11.
ETF Debut and Market Reaction
The approval of spot bitcoin ETFs in the U.S. was a much-anticipated event, with many investors and analysts predicting a positive impact on the market. However, the event has turned out to be a “sell-the-news” scenario, a common phenomenon in capital markets where asset prices and sentiment push prices higher leading up to a bullish event, only to see prices fall after the event occurs. Analysts at Japan-based crypto exchange bitBank and 10X Research had expected a decline in Bitcoin’s price, with CryptoQuant setting a target as low as $32,000.
On-chain analysis firm CryptoQuant was among the few that speculated the ETF approval would lead to a sell-the-news event. This analysis is supported by the recent selling pressure on Bitcoin, which has been partly attributed to sales from the FTX bankruptcy estate, which has dumped some 22 million shares of Grayscale’s GBTC.
Market Sentiment Shift
The Crypto Fear and Greed Index, which measures the current sentiment of the cryptocurrency market, fell to a ‘neutral’ level after staying in the ‘greed’ phase since late October. This shift indicates a change in investor sentiment, which may have contributed to the recent price decline.
The debut of spot Bitcoin ETFs in the U.S. has not sustained the bullish momentum for Bitcoin as many had hoped. Instead, the market has experienced a sell-the-news event, with Bitcoin’s price falling below $39,000. On-chain analysis and shifts in market sentiment have played a role in this downturn, with further analysis suggesting that the price could potentially fall even lower in the near term.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information