Kaiko Analysis: Bitcoin ETF Anticipation and Market Volatility
According to a recent report by Kaiko, the anticipation of a Bitcoin exchange-traded fund (ETF) is expected to cause increased volatility in the cryptocurrency market. This comes after a flash crash and market downturn in early January, which analysts believe was influenced by speculation about the denial of a spot ETF.
Price Slippage as an Indicator
An often overlooked metric called price slippage provides valuable insights into market stability. It measures the difference between the expected price at the time of a market order and the actual execution price. Kaiko’s analysis focused on the average slippage for a hypothetical $10,000 market order on platforms like Binance, Coinbase, and Kraken.
Leading up to the market downturn, slippage fluctuated as usual. However, on January 2nd, it exceeded 0.02% and remained at that level for over a day. This indicated a decrease in liquidity despite Bitcoin’s price remaining around $45,000.
SEC Decision Impact
The approaching deadline of January 10th marks the SEC’s final decision on ARK 21Shares’ spot ETF. Regardless of the outcome, Kaiko predicts that the market will experience heightened volatility in the coming days.
Hot Take: Increased Volatility Ahead
The anticipation surrounding a potential Bitcoin ETF has already affected the cryptocurrency market with increased volatility. As investors eagerly await the SEC’s decision on ARK 21Shares’ spot ETF, there is likely to be further turbulence in the market. The recent flash crash and indications of instability before the downturn serve as warnings of potential future fluctuations. Traders and investors should closely monitor price slippage and stay informed about any developments related to the ETF decision. Brace yourself for an exciting and unpredictable period in the crypto market.
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