Experts Analyze the Impact of ETFs on the Market
Date: 2024-01-10 Author: Dima Zakharov Categories: BLOCKCHAIN
K33 Research experts have recently discussed the anticipated impact of the U.S. Securities and Exchange Commission's (SEC) decisions regarding Bitcoin Exchange-Traded Funds (ETFs) on the cryptocurrency market. According to their analysis, the expected SEC rulings on Bitcoin ETF applications may not have as profound an effect on the market as initially anticipated, due to recent market developments.
Senior analyst Vetle Lunde and Vice President Anders Helset had previously expected traders to reap profits following SEC approval. The market was experiencing a surge in long liquidations, which fueled this anticipation. However, a cascade of liquidations on January 3rd significantly improved the market's stability, diminishing the potential impact of closing long positions compared to a week ago.
Furthermore, experts highlighted that the open interest in perpetual Bitcoin contracts decreased by 12% from January 2nd to January 6th. At the same time, financing rates shifted to a neutral state, indicating a relatively calm market compared to the previous week.
"After the reduction in leverage last week, the market has become more resilient in dealing with profit realization after the ETF announcement," they added. Meanwhile, open interest on the Chicago Mercantile Exchange (CME) reached a record high of $6.1 billion, with professional traders maintaining short-term optimism.
"CME premiums remain high," Lunde and Helset emphasized. "Both premiums and open interest are likely to see significant reductions following ETF approval. The transition from futures-based ETFs to spot ETFs will be reflected in CME's closed long positions."
The announcement of approval or rejection of Bitcoin ETFs is imminent, with the final verdict expected on January 10, 2024. Analysts anticipate high market volatility in response to the outcome.
