Why This Analyst Thinks It’s Impossible For The Bitcoin ETF To Be Priced In
05 Januar 2024 - 6:00PM
NEWSBTC
On a high note, the crypto market starts in 2024, with BTC’s price
rising steadily from $41,000 to around $46,000 as the Bitcoin ETF
decision looms. The upcoming decisions by the U.S. Securities and
Exchange Commission (SEC) on the BTC spot Exchange Traded Funds
(ETFs) could lead to significant market fluctuations. Related
Reading: Bitcoin Price Reclaims $43,000 On Rumor Of ETF Approval
Tomorrow These decisions, expected between January 5th and 10th,
have kept Bitcoin (BTC) and Ethereum (ETH), along with altcoins, on
a tightrope with high funding rates indicating a preference for
leveraged trades. Crypto Market Braces For Bitcoin ETF Decision:
Volatility Spikes The New Normal? According to a report from
options platform Deribit, the current market environment is hard to
read with the usual indicators. Still, the readings across funding
rates hint at a potential decline. The anticipation of a price drop
following the ETF announcement, a classic ‘buy the rumor, sell the
news’ scenario, is in full swing. Nevertheless, the report claims
the continued rise in crypto and sustained interest in trading BTC
futures via the Chicago Mercantile Exchange (CME) highlights a
growing enthusiasm for cryptocurrencies from traditional finance
institutions. History suggests that the crypto market often reacts
more negatively to actual product launches than preliminary
approvals. This was evident in events like the BTC CME futures
launch and the Coinbase IPO. If the market prices are high during
the launch of these new financial products, it might trigger a
short-term sell-off, especially if they fail to meet flow
expectations, Deribit stated. However, any major price corrections
should be “brief,” given the favorable macro environment, technical
factors, and the build-up to Bitcoin’s halving. In case of decline,
traders should watch the $40,000, $37,000, and $31,800 levels as
potential support. The volatility in Bitcoin and Ethereum has been
noteworthy in the run-up to these ETF approvals, with Bitcoin’s
implied volatility rising sharply to around 70, outperforming
Ethereum. The current volatility levels are likely to decline
following the Bitcoin ETF decision. On the BTC volatility, the
report stated the following forecasting a trend for the upcoming
bull market: Ethereum, while similar to Bitcoin, hasn’t yet reached
inversion. That said, its long-term volatility is outperforming
Bitcoin’s, suggesting optimism for Ethereum in 2024. In that sense,
traders should look for any downside momentum in the ETH/BTC
trading pair. Deribit claims that any decrease in the price of ETH
is a “buy opportunity,” as suggested by the current market
structure. Impact On Bitcoin Derivatives The options market’s
reaction to the upcoming ETF decision is subtle, with Bitcoin’s
call skew recovering quickly after recent market fluctuations.
Ethereum maintains a consistent call premium, indicating a marked
shift in focus towards Ethereum following Bitcoin ETF approvals. As
for option flows and dealer gamma positioning, Bitcoin’s option
volumes have decreased, with the market favoring buying in call
spreads and selling in put spreads. In other words, derivatives
player have been increasing their call positions in anticipation of
the ETF decision in the US. Related Reading: Crypto Analyst
Predicts Bullish Hammer For XRP In Upcoming Move Regarding the
impact of this decision, Deribit and others have provided their
views, but one analyst believes that the long-term effect of a
Bitcoin spot ETF can’t be measured at the moment. Via the social
media platform X, this analyst stated: It’s impossible for
something to be “priced in” if a huge amount of capital literally
doesn’t have access yet. Yes, currently eligible speculators and
their available capital can buy ahead of an event. But that’s as
far as any “pricing in” goes if the pool of participants is about
to greatly expand. Note: this does not predict what will happen
immediately after ETF approval. Cover image from Unsplash, chart
from Tradingview
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