Here’s Why Bitcoin (BTC) Price Could Decline to $32,000 in January 2024
A unique scenario is unfolding in the cryptocurrency market as speculation grows about the potential approval of spot Bitcoin ETFs (exchange-traded funds) in early 2024. While many might expect such approval to signal a bullish phase for Bitcoin, several experts are suggesting a different outcome.
Their analysis points towards a potential downturn in Bitcoin’s price, with a projected decline to around $32,000 in January 2024.
One of the reasons behind this prediction is the phenomenon known as “sell-the-news.” Analytics firm CryptoQuant highlights that there is an increasing likelihood of spot Bitcoin ETF approvals, but this also raises the possibility of a market sell-off once the news is officially confirmed. This is because Bitcoin market participants currently hold high unrealized profits, with short-term Bitcoin holders experiencing profit margins of around 30%. Historically, such high margins have often preceded price corrections.
In addition to this, CryptoQuant draws attention to the behavior of Bitcoin miners, who are reaping significant profits due to the recent surge in Bitcoin prices. As these miners start selling their holdings, it could contribute further to downward pressure on the price.
Cathie Wood, CEO and CIO of ARK Invest, acknowledges the potential for a short-term sell-off but remains bullish on Bitcoin’s long-term prospects. She emphasizes that even a modest institutional investment in Bitcoin could have a significant impact on its price, as there are trillions of dollars in assets yet to be allocated. Wood believes that the scarcity of Bitcoin and the anticipated influx of institutional funds after ETF approval will be driving factors for its long-term growth.
Nic Carter, funding partner at Castle Island Ventures, shares a similar perspective, agreeing that there may be a short-term sell-off following the ETF approval. However, he expects the ETF to unlock new capital classes and generate structural flows that will benefit Bitcoin in the medium term. In his view, these positive factors outweigh any potential negative impact from profit-taking.
Ali Martinez, Global Head of News at BeInCrypto, offers a historical analysis, noting that strong Bitcoin performances towards the end of the year have often been followed by bearish trends in January. This pattern suggests a potential spike in profit-taking in January 2024, aligning with the predictions of a price drop made by other analysts.
Ultimately, while the potential approval of spot Bitcoin ETFs may initially generate bullish sentiment, experts caution that a sell-off and subsequent price decline is a plausible outcome. Only time will tell how these predictions will play out in the cryptocurrency market.