Bitcoin Drops Below $39K Following ETF Debut, Investors Sell-the-News Event Continues

Bitcoin (BTC) dropped below $39,000 during Tuesday’s European trading hours, erasing almost all of the gains made in the past two months in anticipation of spot exchange-traded fund (ETF) approvals in the U.S.

BTC decreased by nearly 5% in the last 24 hours, hitting its lowest level in two months. The CoinDesk 20, a liquid index of the top tokens by market capitalization, fell by 7%.

The cryptocurrency dipped to as low as $38,700 before making a slight recovery. The token had recently reached a two-year high of over $49,000 as spot bitcoin ETFs began trading in the U.S. on Jan. 11.

Part of the recent selling pressure on bitcoin has been attributed to sales from the FTX bankruptcy estate, which has sold about 22 million shares of Grayscale’s GBTC in the past few weeks, as reported by CoinDesk. On-chain analysis firm CryptoQuant speculated that the ETF approval would result in a “sell-the-news” event.

“Sell the news” is a well-known term in capital markets and describes how asset prices, leverage, and sentiment push prices higher in anticipation of a bullish event, only for prices to drop shortly after.

The approval of spot bitcoin ETFs in the U.S. was highly anticipated and well priced, and the event is “likely to be a short- to mid-term top for the price,” analysts at Japan-based crypto exchange bitBank told CoinDesk in an email.

Earlier this month, analysts at 10X Research, led by Markus Thielen, predicted that bitcoin would fall to at least $38,000 in the near term, citing technical analysis. CryptoQuant’s target remains much lower at $32,000.

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