The anticipated decisions from the U.S. Securities and Exchange Commission (SEC) regarding Bitcoin spot exchange-traded fund (ETF) applications might not cause the expected sell-off, as noted by K33 Research.
Senior Analyst Vetle Lunde and Vice President Anders Helseth initially predicted traders would cash in profits post-announcement, causing a chain of long liquidations. However, they now feel the market is stronger due to a recent reduction in leverage.
Between January 2 and January 6, the notional open interest in Bitcoin perpetual contracts dropped by 12%, alongside funding rates moving to a neutral state. This indicates a less speculative market compared to the prior week. Lunde and Helseth stated, “Following last week’s reduction in leverage, the market seems better equipped to handle profit-taking when the ETF news hits.”
Despite this, open interest on the Chicago Mercantile Exchange (CME) hit an all-time high on January 9, reaching 131,620 Bitcoin ($6.1 billion), showcasing the continued optimism of professional traders in the short term.
The analysts anticipate the imminent announcement of the Bitcoin spot ETF, likely by January 10. They foresee potential market fluctuations upon the final decision but believe that the competitive low fees from various potential issuers might ease selling pressure.
