A Decision on Bitcoin Spot ETFs Expected Soon
According to K33 Research, a decision on bitcoin spot ETFs is expected between January 8 and January 10. Senior Analyst Vetle Lunde believes that the most likely scenario is for approvals to become a sell-the-news event. Traders are exposed ahead of the verdict, with derivatives pushing massive premiums due to bitcoin’s recent upward momentum. Lunde puts the probability of a sell-the-news scenario at 75% versus a 20% chance of approval.
A Crowded Trade
Futures premiums on the Chicago Mercantile Exchange have surged to annualized levels of 50%, indicating institutional participants’ expectations of approval. Open interest has also grown significantly over the past three months. Maintaining CME exposure comes with a rolling cost each month, making it unsustainable in the long term. On offshore exchanges, funding rates have reached extremes, with shorts reluctant to enter the market ahead of the ETF verdict.
Bitcoin Gains Amid Spot ETF Approval Anticipation
Bitcoin has gained more than 5% in the last 24 hours, breaking past $45,000 due to increasing anticipation of U.S. spot ETF approval. The current price is $45,269 according to The Block’s data.
Down Before Up Again
Bitcoin spot ETFs have been front-run, but it remains to be seen how flows will be once the products launch. The critical factor is the net inflow of new money, which should be at least 50,000 BTC in January. Lunde expects a peak in the bitcoin price rally on the ETF verdict date due to profit-taking from shorter-term traders and unsustainable premiums. However, in the longer term, money flowing through potential spot ETFs combined with the Bitcoin halving event in April could have a favorable impact.
Hot Take: Bitcoin Spot ETF Approvals Likely to Trigger Sell-the-News Event
A decision on bitcoin spot ETFs is expected soon, and while there is a 20% chance of approval, the most likely scenario is a sell-the-news event. Traders are exposed ahead of the verdict, with derivatives pushing massive premiums. If the ETFs are approved, significant inflows could offset selling pressure and drive prices higher. However, there is still a 5% chance of denial. The market shows signs of froth, with futures premiums surging and open interest growing. Retail funding rates are also reaching extremes. Overall, the anticipation of spot ETF approval has led to a 5% gain in bitcoin’s price.
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