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Unrealized profits, Kimchi premium index surges, will Bitcoin ETF become a "Sell the news" event?

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Unrealized profits, Kimchi premium index surges, will Bitcoin ETF become a "Sell the news" event?

The analysis firm CryptoQuant cited several data points suggesting that BTC faces downside risks and that this could potentially lead to a "Sell the news" event for Bitcoin spot ETFs.

High Unrealized Profit Ratio in the Short Term

The investment adage "Buy the Rumor, Sell the News" has been applied in numerous cases, where investors tend to buy based on anticipated events, and when the expected events materialize and are extensively covered by the media, buying interest wanes. In a scenario where all the positive news has been exhausted, prices subsequently decline.

Does this resemble the anticipation of the approval of a Bitcoin spot ETF in the cryptocurrency space recently?

The Block cited a report from CryptoQuant, indicating that market participants have accumulated significant unrealized profits after Bitcoin broke the $40,000 barrier.

Notably, the unrealized profit ratio for short-term Bitcoin holders has surged to 30%, a level typically seen before price retracements in historical trends.

Continuous Selling by Bitcoin Miners

Analysts at CryptoQuant also mentioned that with BTC prices remaining above $40,000, miners' selling activities have increased in recent weeks, potentially exacerbating selling pressure on Bitcoin.

South Korea Kimchi Premium Index Surges

CryptoQuant previously highlighted that the Kimchi premium index in South Korean cryptocurrency exchanges is often used to gauge whether short-term prices are inflated, especially given the fervent FOMO sentiment among South Korean crypto traders.

The Kimchi premium index indeed indicates signs of being overinflated, reaching levels last seen in January 2022.