The U.S. SEC’s Verdict on Bitcoin Spot ETFs Is Unlikely to Cause a Sell-Off, According to K33 Research
The anticipated decisions by the U.S. Securities and Exchange Commission (SEC) regarding bitcoin spot exchange-traded fund (ETF) applications are now less likely to trigger a sell-off in the market, according to K33 Research. The analysts stated that the recent leverage shakeout has improved the state of the market and made it more robust. They also noted that open interest in bitcoin perpetual contracts has decreased, indicating less froth in the market compared to previous weeks. Therefore, they believe that the market can handle profit realization following the ETF announcement without significant negative consequences.
Open Interest Hits All-Time High on Chicago Mercantile Exchange
The analysts at K33 Research also highlighted that open interest on the Chicago Mercantile Exchange (CME) reached an all-time high of 131,620 BTC ($6.1 billion). Professional traders remain optimistic in the short term, with CME premiums trading in a healthier uptrend than before. However, they expect both premiums and open interest to decrease once the ETFs are approved, as there will likely be a rotation from futures-based ETFs to spot ETFs.
Bitcoin Spot ETF Announcement Expected Soon with Cheap Fees
K33 Research reiterated that a decision on bitcoin spot ETFs is expected by January 10th. While approval is already widely anticipated, they anticipate increased volumes and fast-paced adjustments in traders’ risk profiles after the final verdict. Several firms have filed amended forms, including Bitwise offering zero fees for the first six months or until $1 billion in assets, and Ark/21Shares significantly reducing its fee from 0.8% to 0.25%. Other filers have set fees ranging from 0.25% to 0.9%. Grayscale also filed an amended form, lowering its fee from 2% to 1.5% for its existing bitcoin trust product.
Hot Take: Lower Fees and Potential Inflows
The low fees offered by many prospective issuers have two positive effects, according to K33 Research. Firstly, it makes investing more attractive with lower management fees. Secondly, lower fees reduce the selling pressure on BTC as issuers liquidate less BTC to cover fees. The SEC’s decision on the approval of the 19b-4 and S-1 forms will determine when trading for these ETFs will begin, potentially as soon as the day after approval.
Source: K33 Research
Hot Take: Bitcoin Spot ETF Verdict Unlikely to Cause a Market Sell-Off
K33 Research suggests that the anticipated decisions by the U.S. Securities and Exchange Commission (SEC) regarding bitcoin spot ETF applications are now less likely to result in a market sell-off. The recent leverage shakeout has improved the market’s robustness, making it better equipped to handle profit realization following the ETF announcement. Open interest in bitcoin perpetual contracts has also decreased, indicating less froth in the market compared to previous weeks. Therefore, K33 Research believes that traders are less likely to realize profits immediately after the verdict, leading to a more stable market response.
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