Institutional Demand for Bitcoin Exposure Through Exchange-Traded Products
Over the past month, there has been a significant increase in institutional demand for bitcoin exposure through exchange-traded products. According to the latest K33 Research report, bitcoin ETP inflows have grown by 27,095 BTC to record levels, surpassing the flows in June and July after BlackRock’s bitcoin spot ETF filing. Additionally, high exposure on the CME indicates strong institutional demand for bitcoin as the latest SEC bitcoin spot ETF deadlines approach.
Bitcoin Spot ETF Deadlines and Market Momentum
The SEC has a narrow window to approve all current bitcoin spot ETF applications by November 17. This deadline applies to applications from Hashdex and Franklin, but if the SEC wanted to approve all applications simultaneously, this is the opportunity to do so. After this window passes, the emphasis will shift to the next deadline on January 10.
If approval does not happen during this time frame, momentum might slow in the crypto markets as there would likely be multiple weeks to wait for significant news relating to the ETFs.
CME Traders’ Optimism vs. Crypto Natives’ Caution
CME traders continue to exhibit an overall bullish stance, with annualized futures premiums for both bitcoin and ether futures remaining above 15% for three consecutive weeks. However, crypto-native traders have not mirrored this optimism. Funding rates trending above neutral since November 9 and consistent perps trading at premiums to the spot market indicate heightened caution from the short side.
As a result, yesterday saw the largest liquidation event since August’s plunge to $26,000, with $89.5 million in long liquidations across OKX, Binance, and Bybit according to Velo Data. Bitcoin’s price fell around 4% on November 14 from a high of $36,740 to $35,230 before recovering.
Ether Futures Trading at a Premium Relative to Bitcoin
BlackRock’s recent filing for an ether spot ETF has attracted fresh longs to CME’s ether futures market. This has led ether’s basis to trade at a premium relative to bitcoin for the first time since August. The basis is the difference between the spot price of an asset and its futures price.
Despite slightly worse odds for ether spot ETF approvals compared to bitcoin due to technical nuances related to Grayscale’s SEC lawsuit, CME premiums and burgeoning activity represent a solid market signal favoring continued relative strength in ether.
Hot Take: Uncertainty Surrounding Bitcoin Spot ETF Approvals
The uncertainty surrounding the approval of current bitcoin spot ETF applications by November 17 creates potential market momentum slowdowns as investors await significant news relating to the ETFs. Additionally, while CME traders maintain a bullish outlook on both bitcoin and ether futures markets, crypto-native traders are exercising caution due to heightened funding rates and consistent perps trading at premiums compared to spot markets. This divergence in sentiment may continue impacting market dynamics in both Bitcoin and Ether trading.
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