2023 has been a good year for altcoins, particularly Q4. However, this is only a fraction of what is possible in a full-blown bull run. Now that we have entered 2024, the probability of ETF’s frenzy has changed, and there is concern about a sell-event. Many analysts have predicted that BTC might hit a rough patch soon.
As the crypto sphere braces for a watershed moment with the potential approval of the inaugural Bitcoin spot Exchange-Traded Fund (ETF), K33 Research, a prominent analytics firm, has raised a cautious flag, suggesting an exuberant market sentiment leading up to the decision.
According to the K33 Research report, the final call on Bitcoin spot ETFs is expected to drop between January 8 and January 10, with a strong possibility of impactful news breaking even sooner. Senior Analyst Vetle Lunde underscores a notable trend within the crypto community – a prevailing debate about the potential “sell-the-news” response post-ETF approval.
Lunde’s observations point to a market filled with traders heavily invested ahead of the verdict. The derivatives market, particularly, highlights substantial premiums, hinting at pronounced enthusiasm following Bitcoin’s sustained upward trend over the past few months.
Also Read: SEC will REJECT Bitcoin Spot ETFs Again Says Matrixport Report
Lunde’s analysis suggests a 75% probability of a ‘sell-the-news’ scenario. In contrast, the chances of approval stand at 20%, with only a 5% likelihood of an outright ETF denial. Despite encouraging signs from recent regulatory engagements, the market remains highly speculative.
The analysis highlights a robust futures market on the Chicago Mercantile Exchange (CME), reflecting a 50% annualized growth. This trend indicates a rising interest from institutional investors. However, questions arise about the sustainability of this momentum given the escalating premiums.
Retail Dynamics
Retail investors, evidenced by offshore exchange funding rates reaching a yearly peak of 72%, seem hesitant to take short positions as the ETF decision looms. Analysts warn of potential long squeezes due to the aggressive stance of long positions in the market.
Certain altcoins, including SOL, ORDI, and BONK, have witnessed significant growth. While this could signal a peak in the altcoin market, it may also indirectly benefit Bitcoin. A shift in retail interest towards altcoins might mitigate the risk of significant Bitcoin liquidations, fostering a more stable leverage environment. Given BTC’s current trading range between $40,500 and $43,500, heightened volatility is anticipated as the ETF decision date approaches.
Read More: Are People Against Bitcoin Spot ETFs? Public Feedback Rolls In as SEC Approval Looms
The impending Bitcoin ETF decision has heightened market excitement. However, K33 Research emphasizes the potential for a market adjustment post-approval, advocating for cautious navigation in this intricate crypto landscape.
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