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

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