The U.S. Securities and Exchange Commission's (SEC) anticipated verdicts on Bitcoin spot exchange-traded fund (ETF) applications are now less likely to trigger a sell-the-news event.
The U.S. Securities and Exchange Commission's (SEC) anticipated verdicts on Bitcoin spot exchange-traded fund (ETF) applications are now less likely to trigger a sell-the-news event, according to K33 Research.
K33 Senior Analyst Vetle Lunde and Vice President Anders Helseth previously expected traders to realize profits following the announcement, leading to a cascade of long liquidations. However, they now believe that the market is more robust due to a leverage shakeout that occurred last week.
Notional open interest in Bitcoin perpetual contracts experienced a 12% decrease between January 2 and January 6, with funding rates moving to a neutral state. This indicates less froth in the market compared to the previous week. "Following the deleveraging of last week, the market is more robust to handle profit realization on the ETF announcement," Lunde and Helseth wrote.
Meanwhile, open interest on the Chicago Mercantile Exchange (CME) hit an all-time high of 131,620 Bitcoin ($6.1 billion) on January 9, suggesting that professional traders remain optimistic in the short term.
The analysts expect the Bitcoin spot ETF announcement to be imminent, with a decision expected by January 10. They anticipate market volatility upon the final verdict, but believe that the low fees offered by many prospective issuers will mitigate selling pressure.
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