DIGIVESTASI - Bitcoin (BTC) price started the new year volatile, reaching $45,000 on January 2, 2023, but then quickly dropped to $42,000 on January 3, 2023. At the time of publishing this article, the Bitcoin price has gradually decreased to $43,000. 

These fluctuations are closely related to the one-time approval of Bitcoin Exchange Traded Funds (ETFs). For example, the Bitcoin price drop earlier this week was due to the Securities and Exchange Commission possibly rejecting a spot Bitcoin ETF, Matrixport reported.

According to CryptoQuant, news related to the approval or rejection of spot Bitcoin ETFs can create market volatility through the phenomenon of "news selling." This term refers to a situation where an asset's price and sentiment increase before a positive event but drop immediately afterward due to strong selling pressure.

In its analysis, CryptoQuant pointed out that current Bitcoin holders receive high unrealized profits when the value of the digital asset exceeds the $40,000 mark. 

"Short-term Bitcoin holders have an unrealized profit margin of 30%, which usually occurs before a price correction," the report said. " 

CryptoQuant also noted that Bitcoin miners are seeing high unrealized profits, which may be contributing to Bitcoin selling pressure. 

"We have seen mining machine sales increase in recent weeks, with prices remaining above $40,000," the report added.

Market sentiment still positive 
Although Bitcoin price is experiencing some volatility, Ryan Lee, chief analyst at Bitget Research, said the overall sentiment in the cryptocurrency market is currently bullish. This is mainly related to Bitcoin's halving approach and the growing interest of traditional institutions in BTC. 

However, Lee emphasized that despite the positive sentiment, market participants should still be wary of sudden price movements. It advises users to keep abreast of the latest cryptocurrency-related news, plan their strategies carefully and set profit and loss points.