Bitcoin Downside Risks Remain Despite Early Success of Spot ETFs News, Observers Say

Despite the initial success of several U.S. listed spot exchange-traded funds (ETFs), there are lingering concerns in the crypto market. On-chain metrics and indicators still suggest that the recent price correction for bitcoin (BTC) may not be complete, or at least a new rally may not be imminent, according to insights from a firm.

Bitcoin witnessed a 15% drop in prices following the highly anticipated ETF listing last week. The outflows from Grayscale’s Bitcoin Trust product are believed to be a contributing factor to the downward pressure. While ETF volume data from BlackRock (BLK), Fidelity, and Bitwise surpassed $500 million, indicating interest from regulated funds and professional traders, the market faces potential downside risks.

CryptoQuant, an on-chain analysis firm, expressed caution in a note, stating that various metrics indicate the ongoing correction or suggest that a new bullish trend is not yet in sight. The note highlighted that short-term traders and major bitcoin holders continue significant selling, reflecting a prevailing “risk-off” sentiment. Additionally, unrealized profit margins have not decreased sufficiently to indicate seller exhaustion.

Contrary to the optimistic expectations of many traders regarding the bitcoin ETF approvals, CryptoQuant took a more cautious stance. Crypto traders also shared this sentiment, noting that any upward momentum was tempered by spot sales, leading to a methodical sell-off. Although bitcoin’s intraday range exceeded 3.5%, reaching recent highs triggered a systematic sell-off early on Wednesday. This observation is viewed as a cautionary note rather than a definitive judgment on the overall cryptocurrency bull market, according to Alex Kuptsikevich, FxPro senior market analyst.

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