Bitcoin could fall to as low as $32,000 next month if an ETF is approved.

Bitcoin (BTC) is expected to correct to as low as $32,000 next month following the potential approval of a spot ETF, according to data provider CryptoQuant.

In what is being described as a potential "sell the news" event, CryptoQuant said in a note to CoinDesk that trader's unrealized profits are currently lingering at a level that historically precedes a correction.

"Sell the news" is a well-known term in capital markets, it describes how asset prices, leverage and sentiment run up in the lead up to a bullish event only for prices to tumble shortly after.

This is because astute traders capitalize on the over-crowded long trade, trapping those with leverage and forcing them to close or get liquidated as price goes against them.

An ETF being approved is perceived as a bullish event as it will open up inflows to bitcoin from institutions, thus creating consistent buy pressure.

"Short term Bitcoin holders are experiencing high unrealized profit margins of 30%, which historically has preceded price corrections (red circles)," CryptoQuant wrote in the note. "Moreover, short term holders are still spending Bitcoin at a profit, while rallies usually come after short-term losses are realized."

CryptoQuant added that bitcoin price may decline to as low as $32,000, which is the the short-term holder realized price.

Capriole Investments said that "conservative portfolio management" makes sense in the lead up to the potential approval of a spot ETF.

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