Just a couple of weeks from now, the U.S. could have its first spot bitcoin ETF. The excitement around the prospect has been building for months, but the market may be a little overheated now. The chances that the ETF approval will be a sell-the-news event have been getting higher, according to CryptoQuant, which points to the fact that investors have been sitting on high unrealized profits – a trend that historically has preceded price corrections. In this case, bitcoin could correct all the way down to $32,000, the short-term holder realized price, the crypto data provider said. “A lot of unrealized profits have been building up because of the price rally in anticipation of the ETF approval, and now those unrealized profits are at extremely high levels for short-term holders and also for miners,” said Julio Moreno, CryptoQuant’s head of research. “Because there is so much unrealized profit we argue that, once the news of ETF approval is confirmed, market participants would want to realize those profits by selling bitcoin.” Meanwhile, with the recent surge in bitcoin price and transaction fees, miners have entered “extremely overpaid” territory, according to CryptoQuant, and have been selling lately with the price remaining above $40,000. The ETF has been the story of the second half of the year in crypto. Bitcoin has gained 57% over the past three months, as the Securities and Exchange Commission’s engagement with potential ETF issuers appeared to increase and optimism started to intensify. The coin is up 11% for December. Approval would allow the first ever spot bitcoin ETFs to launch in the U.S. It’s regarded by many as a key catalyst for bitcoin and crypto broadly in the new year, the bull case being that it would bring a flood of new investors into the market. (Of course, it’s also possible the SEC issues rejections, but broad consensus is that that’s unlikely.) Mark Connors, head of research at investment fund manager 3iQ — which launched a spot bitcoin ETF in Canada in 2021 — said there’s a “strong likelihood” of a pause or brief pullback should a bitcoin ETF, or several, receive SEC approval. However, he doesn’t expect the sell-the-news phenomenon to take shape. “We have seen demand from clients for our spot bitcoin ETF in anticipation of a U.S. spot bitcoin ETF approval, so there may be some selling, but most of these clients are aligned with our price expectation for bitcoin, looking at recent purchases as good entry points for a longer term buy, less a short-term trade,” Connors said. Assuming a U.S. bitcoin ETF gets greenlit, Connors said he expects bitcoin to trade between $45,000 and $55,000 on the day. The price could bounce in a $10,000 range but with a positive skew, as it did in March, when bitcoin rallied on banking crisis woes in the U.S. He added that bitcoin could reach $100,000 by the end of 2024. “Any pause in bitcoin’s appreciation will be short and perilous for market timers,” Connors said. Ric Edelman, founder of the Digital Asset Council of Financial Professionals, said the day the SEC gives the greenlight could be anticlimactic but that it wouldn’t change the bull case for it. “The price will rise, but not necessarily as much as some might expect,” he said. “Advisors and firms have clearly stated that they are not buying bitcoin until they can do so via these products. So, yes, there is buying occurring now in anticipation of SEC approval, but that approval would be the start of the action, not the end.” It’s entirely possible that rather than investors jumping into bitcoin ETFs on day one, new flows take place gradually over time – and that that trend gets misunderstood as low appetite for the ETFs. Already, some on Wall Street are concerned that expectations for institutions are overinflated and that a bitcoin ETF alone may not convert “nocoiners ” (crypto slang for a person who has never bought any crypto before) into buyers. “I want to be humble about the effect of spot ETF … if the initial inflow isn’t as much as people expect, I am concerned about the reversal of current momentum,” said Oppenheimer analyst Owen Lau. “It takes time for people to understand the advantage of holding bitcoin. I don’t expect a big initial inflow initially, it is more likely to be a steady increase. But the recent price action suggests a big pile of money like tens of billions dollar is waiting to get in. It may not be a good setup.” Galaxy Digital , which is in line with the SEC for a spot bitcoin ETF in partnership with Invesco, estimates the addressable market size of a U.S. bitcoin ETF to be roughly $14 trillion in the first year after a launch, and expanding to $26 trillion in the following year and $39 trillion in the third year. While it may be reasonable to expect a short-term dip on ETF approval, Matthew Sigel, head of digital assets research at VanEck, emphasized that the event itself would nevertheless create new pathways for inflows from institutions with a long view. “If the flows don’t materialize, short-term traders may look to push bitcoin lower into the halving, the next big catalyst,” he said. “Keep in mind, however, that many of largest institutions may offer these ETFs on an unsolicited basis only to start. As time goes on, they will integrate bitcoin into their asset allocation models. That may be more meaningful than the initial launch.”