Spot Bitcoin ETF Approval Likely by January 10, says K33 Research: Altcoin Surge May Benefit Bitcoin
Summary:
K33 Research analysts predict a likely approval of a spot Bitcoin ETF by January 10. Recent ETF updates, including Blackrock and ARK Invest agreeing to a cash-creation model for their funds, support this. Despite robust Bitcoin price trends, there has been a drop to annual lows in open interest about BTC perpetual contracts. They also noted a rise in institutional investor interest on the Chicago Mercantile Exchange (CME), but forecast a reduced CME dominance following spot ETF approval. The report also highlights increased interest in altcoins, which could potentially benefit Bitcoin by absorbing market overflow.
Analysts from K33 Research believe that a spot Bitcoin ETF approval seems inevitable by January 10, with recent updates to many exchange-traded funds (ETF) only fortifying that prediction. K33's research chief, Anders Helseth, and chief analyst, Vetle Lunde, mentioned on December 19 that the latest wave of ETF modifications, with Blackrock and ARK Invest amongst those now agreeing to a cash-creation model for their respective funds, signals a likely approval in their report. They also emphasised the robust bitcoin (BTC) price trend over the prior week, with spot transaction volumes of BTC far exceeding those of prior months, indicating that BTC's powerful surge is attracting new purchasers, while also incentivising profit-taking by sellers, thereby driving prices to consolidate on increased trading volume. Nevertheless, the report pointed out that despite the strength in Bitcoin spot transactions, there was a drop to annual lows in open-fascination about BTC perpetual contracts, indicating a lack of retail exuberance. Conversely, institutional investors at the Chicago Mercantile Exchange (CME) have only augmented their interest in bitcoin-related risks, with open interest on the platform rising by 3,100 BTC in just the past week. Over the past few months, their interaction in derivatives markets has been swelling. Despite this surge, the analysts anticipate that interest will soon decline, upon approval of the spot ETFs. They hypothesize that there will be a major shift from futures-based ETFs on the CME. Furthermore, they predict that active traders will likely be cashing in their profits from existing long positions. Combined, this scenario would diminish CME's predominance in the market. Turning their attention to altcoins like Solana (SOL), Ordinals (ORDI) and Bonk (BONK), the report pointed out the exceptional interest shown by traders, as these coins have seen gains of 22%, 114% and 338% respectively, over the past 20 days. Despite many viewing this frenzied market behaviour as a possible harbinger of a market peak, the analysts suggest that this could actually benefit Bitcoin, as the altcoin rush absorbs the overflow, leaving 'unexciting old bitcoin' less exposed to liquidation cascades. Similarly, the altcoin frenzy may serve as a positive pressure release for thrill seekers, while also allowing for healthier leverage conditions for Bitcoin.
Published At
12/20/2023 8:30:00 AM
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